- Starbucks Board of Directors chair, Mellody Hobson, extended sincerest thanks to retiring ceo Kevin Johnson after 13 years of service, affirming the company will continue to be a trail blazer. Howard Schultz appointed interim ceo.
- Outlined investments and actions powered by – and for – green apron partners and stores around the world
- Shared People Positive aspiration to enhance the well-being of one billion people, globally, by 2030
- Deepened commitment to sustainability through new partnerships, technologies and global reusability efforts
- Continued leadership in coffee craft and beverage innovation, announcing new Clover VerticaTM brewer and continued rollout of Mastrena II espresso machine
- Confirmed plans to expand to 55,000 stores in over 100 markets by 2030
- With over $25B returned to shareholders over the last four years, Starbucks recommitted to returning another $20B by 2025
Starbucks Corporation (NASDAQ: SBUX) today hosted its 30th Annual Meeting of Shareholders virtually. Mellody Hobson, Independent Starbucks Board of Directors chair, joined Kevin Johnson, president and chief executive officer, for opening remarks following today’s news that Johnson made the personal decision to retire from the company after 13 years of service. Johnson, who served on the Starbucks Board since 2009, joined the Starbucks leadership team in 2015 as president and chief operating officer. In 2017, Johnson was named president and chief executive officer. To ensure seamless stewardship of the company until a permanent successor is named, the Board has appointed Howard Schultz as interim chief executive officer, effective April 4, 2022. Schultz will also rejoin the company’s Board of Directors.
“On behalf of the entire Board, I want to express our sincerest thanks to Kevin for his leadership of Starbucks,” said Hobson. “Kevin and the entire executive team stepped up to the challenge of the pandemic and navigated one of the most difficult periods in modern history. The economic certainty provided to partners during the early months of the COVID shut down, as well as during mandatory quarantines, underscores our core values and will be an enduring legacy for the company. During Kevin’s tenure, Starbucks scaled an industry leading digital offering spanning nearly 45 million Starbucks Rewards members in the U.S. and China.”
“A year ago, I signaled to the Board that as the global pandemic neared an end, I would be considering retirement from Starbucks. I feel this is a natural bookend to my 13 years with the company. As I make this transition, we are very fortunate to have a founder who is able to step in on an interim basis, giving the Board time to further explore potential candidates and make the right long-term succession decision for the company,” said Kevin Johnson. “I have enjoyed every minute of the job and am proud of what we have achieved together. It has been an honor to serve the 400,000 Starbucks green apron partners around the world and I want to thank them for their service, resilience and optimism.”
Following opening remarks, joined by several members of the leadership team and green apron partners from around the world, Johnson went on to outline Starbucks continued investments and aspirations for people and the planet, and the company’s optimism for a future rooted in humanity, fueled by innovation, and architected by green apron partners.
During the meeting, company leaders extended appreciation to Johnson, celebrated the resilience of green apron partners who have continued to serve communities throughout the COVID-19 pandemic, and recognized all partners as agents in the co-creation of the company’s next chapter.
Listening, Learning and Elevating the Partner Experience
Since 1971, partners have been the catalyst of the Starbucks Experience. Rossann Williams, executive vice president, president North America, today reaffirmed Starbucks continued commitment to listen, learn and work together with partners to deliver real, measurable value for partners, customers and shareholders.
Continued access to innovative COVID-19 benefits for eligible partners, which include:
- Catastrophe pay, extended childcare benefits, expanded mental health support, vaccine pay and food and beverage allowances, as well as partner benefits to help address unique needs in different parts of the world.
Security of jobs and pay as well as unprecedented investments in U.S. partner wages and experiences. In FY22 Q1, the company first shared the announcement of an incremental $1 billion in wages, training and benefits. This includes:
- Hourly pay increasing an average of 17% over 18 months, with starting ranges of $15-$23 per hour by summer 2022.
- Seniority pay increases of up to 5% and 10% for eligible partners with two years and more than five years of services, respectively.
- More than 70 additional staffing recruiters added across markets – with the goal of hiring 5,000 new partners each week.
Ongoing innovation and deployment of new equipment, programs and technology to improve the store experience for partners, while supporting leaders in markets across the country and continuing to raise the bar on quality and coffee craft. This includes:
- Introducing new, industry-leading and more efficient coffee brewing equipment such as the new Mastrena II espresso machines and the new Starbucks Cold Brewer.
- Installing innovative and efficient MerryChef ovens across thousands of stores.
- Deploying new, efficient handheld ordering devices to stores.
- Launching Shift Marketplace, an app designed to make it easy for partners to switch and offer shifts virtually.
- Expanding Starbucks safety Lyft program to provide rides home for partners after dark.
“I’m so proud of all we've done these past two years and how our partners inspired the best ideas to lead us through the pandemic,” said Rossann Williams, president of Starbucks North America. “We are just coming out of one of the most complex times of our lives, and I’m proud of how we figured it out together, in service of each other, our customers and our communities. And we are going to use this exact same approach as we build our future, the way only Starbucks can.”
Committing Each Day to a People Positive Company
Virginia Tenpenny, vice president, chief global social impact officer and board member of The Starbucks Foundation, shared during the Annual Meeting that Starbucks is committed to being People Positive – a bold aspiration to enhance the well-being of one billion people who connect with the company by 2030 – rooted in opportunity, inclusion and community.
“Around the world, we continue to listen deeply to our partners to understand their needs and will remain laser-focused on ensuring we are constantly working to enhance every aspect of the green apron experience. This work is never done,” said Tenpenny. “As we enter a new chapter as a global society – and better understand the needs of our partners and communities – there is always an opportunity to do more and a new way to use our scale for good. For us, people positive means impacting all who come into contact with Starbucks with a goal to ignite mutual thriving across all communities.”
Tenpenny shared that Starbucks, in partnership with The Starbucks Foundation, has committed to a series of announcements to support the People Positive aspiration and strengthen communities around the world, including:
- The Starbucks Foundation launched a new Global Community Impact Grants portfolio committing $30 million by 2030 to drive locally relevant impact in the communities where Starbucks operates.
- The Starbucks Foundation announced an expanded goal to positively impact one million women and girls at origin by 2030, building on insights and impact to date and recognizing the potential to unlock even more opportunities in origin communities.
In addition, Starbucks introduced innovations to its global store portfolio to further strengthen communities and create environments where all feel welcome. This includes committing to open or dedicate 1,000 Starbucks Community Stores across the globe by 2030; and ensuring that physical and digital Starbucks environments meet an elevated standard of accessibility for partners and customers by 2030.
Innovating for a More Sustainable Future
Also during today’s event, Brady Brewer, executive vice president and chief marketing officer, discussed Starbucks aspiration to be a resource positive company – giving back more than it takes from the planet. The company’s planet positive commitment was detailed earlier this week in an announcement highlighting:
- Starbucks efforts to reduce waste through innovative reusable cup programs around the world.
- The launch of a waste and recycling app to support partners’ sustainability efforts.
- A new pilot program with Volvo Cars to help electrify a driving route from Denver to Seattle.
With a global test-and-learn approach to meet the company’s 2030 planet positive goals, Starbucks continues to find inspiration from partners who wear the green apron around the world. Both Michelle Burns, executive vice president, Global Coffee, Tea and Cocoa, and Michael Kobori, vice president and chief sustainability officer, joined Brewer to further discuss aspirations and initiatives underway in becoming planet positive.
"Starbucks is spending this year testing innovative ways to reduce waste and reduce our carbon footprint,” said Michael Kobori, vice president and chief sustainability officer. “Some of our best innovations, like the waste and recycling app, come directly from our store partners. Our store partners know their customers and communities best. When we work together with our partners, we find better solutions to create a more sustainable future for our planet and people.”
Reimagining Coffee Craft While Driving Beverage Innovation
Rachel Ruggeri, executive vice president and chief financial officer, previewed the company's continued efforts to innovate coffee craft through store experiences and coffee innovation.
“At Starbucks, we recognize that one size does not fit all,” said Ruggeri. “Our success has been rooted in how we differentiate ourselves – meeting customers where they need us to be – from the personal connections our partners make with our customers every single day, to our store formats and menu offerings – it’s how we create your Starbucks.”
Building on the company’s continued efforts to raise the bar on coffee, Ruggeri highlighted its beverage innovation, notably in cold espresso and plant-based products, two of the company’s fastest growing categories. Cold beverages accounted for nearly 70 percent of Starbucks total beverage sales last fiscal year – up 20 percentage points over the past three years. Ruggeri also announced the launch of Clover VerticaTM, a new proprietary single cup, on-demand brewer, which will begin rolling out to stores this calendar year.
- The height of engineering, design and coffee quality, Clover Vertica reimagines the brewed coffee experience for partners and customers through a patented process that combines innovative vacuum-press technology with precise control over the temperature of the water and length of brew. This technology ensures that every cup of coffee is brewed to the specific roast and blend specification for the best flavor from each bean, resulting in highly defined flavors.
- Starbucks will deploy Clover Vertica brewers to stores in Minneapolis, as well as the Starbucks Reserve Roasteries and stores in the U.S., beginning in March 2022. The brewer will continue to arrive in more stores this fall, with plans to have the machine in all company-operated stores in the U.S. by 2025.
Delivering Growth at Scale
Ruggeri also discussed the company’s Growth at Scale agenda – noting the importance of being both people and planet positive while growing the business responsibly with focus and discipline. This is what has enabled the company to successfully navigate the pandemic while continuing to differentiate itself. Other key highlights from Ruggeri:
- Strong customer demand for Starbucks driven by focus and discipline in elevating customer experiences, relevant beverage innovation and expanding digital customer relationships.
- Plans to expand to approximately 55,000 company-operated and licensed stores across 100 markets by 2030.
- Continued investments in partners-focused initiatives will enable the company to continue to introduce the Starbucks Experience to a growing number of customers and satisfy their shifting preferences to meet customers wherever they are.
By delivering on its business objectives and executing with focus and discipline on its Growth at Scale agenda, Starbucks has continued to return value to its shareholders:
- The company returned over $25 billion to shareholders in the last four fiscal years through dividends and share repurchases.
- As a result of the company’s strong business recovery in fiscal 2021, Starbucks reinstated its share repurchase program in fiscal 2022 and is committed to returning $20 billion to shareholders over the next three fiscal years.
- With this commitment, Starbucks is expecting to return more than $45 billion over seven years to shareholders for a total of ~40% of market cap as of March 4, 2022, while simultaneously delivering on its long-term commitment for double-digit non-GAAP earnings per share (EPS) growth at scale.
In looking to the future, Hobson notes, “Starbucks has always been a people-focused company guided by our belief that when we invest in our partners, they create the experience that uplifts our customers. That will not change,” said Hobson. “Today, demand for Starbucks is strong and growing. And I strongly believe the relationships built over our coffee make our world better.”
Since 1971, Starbucks Coffee Company has been committed to ethically sourcing and roasting high-quality arabica coffee. Today, with more than 34,000 stores worldwide, the company is the premier roaster and retailer of specialty coffee in the world. Through our unwavering commitment to excellence and our guiding principles, we bring the unique Starbucks Experience to life for every customer through every cup. To share in the experience, please visit us in our stores or online at stories.starbucks.com or www.starbucks.com.
Certain statements contained herein are “forward-looking” statements within the meaning of the applicable securities laws and regulations. Generally, these statements can be identified by the use of words such as “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “feel,” “forecast,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would,” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements include statements relating to trends in or expectations relating to the effects of our existing and any future initiatives, strategies and plans, as well as trends in or expectations regarding our financial results and long-term growth model and drivers, the anticipated timing and effects of recovery of our business, the conversion of several market operations to fully licensed models, our plans for streamlining our operations, including store openings, closures and changes in store formats and models, expanding our licensing to Nestlé of our consumer packaged goods and Foodservice businesses and its effects on our Channel Development segment results, tax rates, business opportunities and expansion, strategic acquisitions, our future relationship with Starbucks Coffee Korea Co., Ltd., expenses, dividends, share repurchases, commodity costs and our mitigation strategies, liquidity, cash flow from operations, use of cash and cash requirements, investments, borrowing capacity and use of proceeds, continuing compliance with our covenants under our credit facilities and commercial paper program, repatriation of cash to the U.S., the likelihood of the issuance of additional debt and the applicable interest rate, the continuing impact of the COVID-19 pandemic on our financial results, future availability of governmental subsidies for COVID-19 or other public health events, the expected effects of new accounting pronouncements and the estimated impact of changes in U.S. tax law, including on tax rates, investments funded by these changes and potential outcomes and effects of legal proceedings. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Actual future results and trends may differ materially depending on a variety of factors, including, but not limited to: further spread of COVID-19 and related disruptions to our business; regulatory measures or voluntary actions that may be put in place to limit the spread of COVID-19, including restrictions on business operations or social distancing requirements, and the duration and efficacy of such restrictions; the potential for a resurgence of COVID-19 infections and the circulation of novel variants of COVID-19 in a given geographic region after it has hit its “peak”; fluctuations in U.S. and international economies and currencies; our ability to preserve, grow and leverage our brands; the ability of our business partners and third-party providers to fulfill their responsibilities and commitments; potential negative effects of incidents involving food or beverage-borne illnesses, tampering, adulteration, contamination or mislabeling; potential negative effects of material breaches of our information technology systems to the extent we experience a material breach; material failures of our information technology systems; costs associated with, and the successful execution of, the Company’s initiatives and plans, including the successful expansion of our Global Coffee Alliance with Nestlé; our ability to obtain financing on acceptable terms; the acceptance of the Company’s products by our customers, evolving consumer preferences and tastes and changes in consumer spending behavior; partner investments, changes in the availability and cost of labor including any union organizing efforts and our responses to such efforts; significant increased logistics costs; inflationary pressures; the impact of competition; inherent risks of operating a global business; the prices and availability of coffee, dairy and other raw materials; the effect of legal proceedings; and the effects of changes in tax laws and related guidance and regulations that may be implemented and other risks detailed in the company filings with the Securities and Exchange Commission, including in the “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company's most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. The company assumes no obligation to update any of these forward-looking statements.
Long-term non-GAAP EPS growth was not reconciled to the comparable GAAP EPS growth because GAAP EPS is not accessible on a forward-looking basis. The company is unable to reconcile this forward-looking non-GAAP financial measure to the most directly comparable GAAP measure without unreasonable efforts because the company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP EPS in the future but would not impact the non-GAAP EPS. Such items may include acquisitions, divestitures, restructuring, and other items. The unavailable information could have a significant impact on the company’s GAAP financial results.
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