Activist investor Elliott Investment Management has reportedly built a sizable position in Starbucks — sending the coffee chain’s stock soaring late in Friday’s trading day.
Elliott has reportedly been pushing Starbucks – which has faced criticism over long wait times – to find new ways to boost its stock price, according to the the Wall Street Journal, which first reported the Elliott’s stake.
The Seattle-based coffee giant’s stock jumped nearly 7%, to $79.27, on the news. But the company’s shares are down 23% in the past year.
Elliott has a history of shaking up struggling businesses. The firm has recently pushed for changes at companies including Southwest Airlines and software company Salesforce.
“We do not comment on rumors or speculation,” a Starbucks spokesperson told The Post in a statement.
Elliot declined to comment.
Starbucks’ stock price took a hit in April when the chain, the world’s biggest coffee company by location and sales, reported a drop in same-store sales for the first time in nearly three years.
CEO Laxman Narasimhan – who succeeded longtime executive Howard Schultz in March 2023 – has faced criticism from his predecessor for his handling of the company.
Narasimhan has had to lower earnings estimates several times since he took the helm and Starbucks market value has plunged – from nearly $115 billion under Schultz to $89 billion as of Friday.
Schultz critiqued his replacement’s business strategy and even gave advice for how the company can move forward in a post on LinkedIn in May.
A major complaint from Starbucks customers is long morning wait times, with some exasperated customers cooling their heels for as long as 40 minutes to get the java fix.
To combat the lines, Starbucks has changed some of its work policies. Starbucks baristas, under the old method, prioritized cold drink orders over hot drink orders, no matter which order was placed first. But that method was found to delay waiting customers.
The coffee chain has also begun tapping employees to act as “play callers” who step away from drink production when stores are especially busy and help out with whatever extra tasks are needed to prevent logjams.
Starbucks has been trying to draw in new customers with special discounts for app users and expanded menu options.
The news of Elliott’s push for change comes just months after a coalition of labor unions ended its boardroom fight at Starbucks after the company agreed to work toward reaching labor agreements.
Starbucks workers have been working to unionize since 2021, pushing for better pay and working conditions.
The Strategic Organizing Center (SOC), a coalition of North American labor unions had urged investors to elect three of its director candidates to Starbuck’s 11-member board.
The fight was closely watched on Wall Street because it marked the first time a labor union used tools traditionally employed by hedge funds to push for board seats at a corporation.
With Post wires
Credit: Source link
