Elliott Management Takes Stake in Starbucks, Eyes Improvement
Elliott Management, a prominent activist investor, has taken a significant stake in coffee giant Starbucks. The move is aimed at improving the company’s share price, according to the Wall Street Journal. This development comes as Starbucks faces challenges, including declining sales and traffic.
The Stake
Elliott Management, one of the largest hedge funds in the world, has taken a significant stake in Starbucks. The exact size of the stake is unknown, but it is believed to be substantial. The firm is engaging with Starbucks’ management to identify ways to improve the company’s performance.
Activist Investors
Elliott Management is known for its activist investing approach. The firm has taken stakes in numerous companies, including Southwest, SoftBank, Johnson Controls, and Texas Instruments. Activist investors like Elliott often push for changes to improve a company’s financial performance.
Starbucks’ Challenges
Starbucks has been facing challenges for several quarters. The company reported disappointing quarterly results in April, with U.S. same-store sales falling 3% and traffic dropping 7%. The coffee chain also cut its 2024 outlook.
CEO’s Challenges
Starbucks’ CEO, Laxman Narasimhan, is under pressure to turn the company around. Narasimhan was hand-picked by former CEO Howard Schultz to lead the company. Schultz has recently spoken about the challenges facing Starbucks, but has ruled out a fourth stint as CEO.
Improvement Efforts
Narasimhan has emphasized the need to improve store experiences. The company is working to reduce rates of incomplete mobile app orders and to attract occasional customers who come in less often.
Worker Unions
Starbucks has also faced an activist effort from its own worker unions. The unions, which began organizing in 2021, ended their effort to install their own candidates on the company’s board of directors. Conversations between management and labor are ongoing.
Conclusion
Elliott Management’s stake in Starbucks is a significant development that could impact the company’s performance. The activist investor’s engagement with management could lead to changes aimed at improving the company’s financial performance. However, the challenges facing Starbucks are complex and multifaceted, and will require a sustained effort to address.
FAQs
Q: What is Elliott Management’s stake in Starbucks?
A: The exact size of Elliott Management’s stake in Starbucks is unknown.
Q: What are Elliott Management’s goals for Starbucks?
A: Elliott Management aims to improve Starbucks’ share price by engaging with management to identify ways to improve the company’s performance.
Q: What are the challenges facing Starbucks?
A: Starbucks is facing challenges, including declining sales and traffic, as well as difficulties in reducing rates of incomplete mobile app orders and attracting occasional customers.
Q: What is the role of activist investors like Elliott Management?
A: Activist investors like Elliott Management use their stakes to push for changes that can improve a company’s financial performance.
Q: Will Howard Schultz return as CEO of Starbucks?
A: No, Howard Schultz has ruled out a fourth stint as CEO of Starbucks.
Q: What is the status of the worker unions at Starbucks?
A: The worker unions, which began organizing in 2021, ended their effort to install their own candidates on the company’s board of directors. Conversations between management and labor are ongoing.
Author: www.cnbc.com
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