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Starbuck's stock price, which has lost 23% over the last 52
weeks, jumped nearly 7% to end trading at $79.27 on Friday.
The stock price took a hit in April when Starbucks, 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.
It also reported lower than expected profit as it grapples with
weaker demand in the United States and China, its two largest
markets. The disappointing earnings report led the company to
cut its annual sales forecast.
The earnings report also prompted former Starbucks CEO Howard
Schultz, who remains one of its biggest investors, to write on
LinkedIn that the coffee chain needs to overhaul its U.S.
operations.
Schultz, who had been Starbucks' CEO three times, stepped off
the company's board in 2023, a few months after it tapped Laxman
Narasimhan a former PepsiCo executive and Reckitt Benckiser CEO,
as its top executive.
The Wall Street Journal first reported Elliott's new stake and
said the activist hedge fund and coffee chain have been holding
private discussions in the last weeks.
Starbucks and Elliott declined the comment.
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.
Elliott, which has won board seats at Etsy, Phillips 66 and
Match in the first half of 2024, is currently pushing for
changes at Southwest Airlines. It also launched campaigns at
Texas Instruments and Johnson Controls earlier this year.
The hedge fund oversaw $65.5 billion in assets at the end of
December.
(Reporting by Svea Herbst-Bayliss in Providence, Granth Vanaik
in Bengaluru; Editing by Shailesh Kuber and Marguerita Choy)
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