Shares of Starbucks (SBUX -0.90%) had a tough time this week. The coffee chain's stock slumped as much as 11% this week. As of 2:37 p.m. ET Thursday, shares were still down roughly 9.6% compared to last Friday's close.
A change at the upper echelons of management came with a fair amount of drama.
Former Starbucks CEO Kevin Johnson announced last month that he was retiring from the chief executive chair, effective April 4. Johnson has been at Starbucks for 13 years, serving the past five years as CEO. Howard Schultz, who has served as CEO on two previous occasions, returned to the big chair until a permanent replacement can be found.
Schultz didn't waste any time making a mark on the company, announcing that he would suspend its stock-repurchase program, planning to invest more in its baristas and stores. This was a stark reversal from a pledge Starbucks made in October 2021 when the company committed to spend $20 billion in dividends and buybacks over the coming three years.
There was even more drama. In a regulatory filing that dropped Tuesday, the company revealed that in connection with Schultz's return, Starbucks' General Counsel Rachel Gonzalez would leave the company effective May 20, walking away with severance, bonuses, and other payouts worth more than $7.5 million, according to the filing.
In his return to Starbucks, Schultz has stirred up a fair amount of controversy. He held a town hall meeting for staff, citing the current employee organizing efforts going on at Starbucks. Schultz referred to "the threat of unionization" and went on to say "I'm not an anti-union person. I am pro-Starbucks, pro-partner, pro-Starbucks culture ... [and] we didn't get here by having a union."
The combination of Schultz's contentious comments and the company's plan to suspend buybacks was enough to send some Starbucks investors to the exits. However, for those with a long-term view, this is likely nothing more than another in a long line of challenges Starbucks has successfully overcome on the road to greatness.