Just a month ago, we noted that coffee giant Starbucks (SBUX) could “still be doomed despite new CEO.” While the new CEO has rolled out several new initiatives, the concern remains. And given that Starbucks just lost Michael Conway to retirement, its North American CEO, the company leadership change may be more of a concern than originally assessed. Starbucks investors seemed concerned with Conway’s departure, sending shares of SBUX lower by about 1% by early Tuesday afternoon.
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Conway had been with Starbucks for about 11 years, a CNBC report noted, but had only been promoted to the North American CEO slot back in April. Just five months later, Conway suddenly decided it was time to retire outright.
Interestingly, there will be no replacement for Conway, the report noted. Instead, Sarah Trilling, Starbucks’ head of retail for North America, will report directly to CEO Brian Niccol instead. The report suggested that Conway may not leave immediately, instead remaining as an “executive advisor” through the rest of the year.
Meanwhile, More Union Troubles
The loss of a major figure like Conway might be bad enough on its own, but Starbucks is also running afoul of the National Labor Relations Board as well. A judge with this board ruled Starbucks must reopen two stores in Ithaca, NY—the one on Meadow Street and the one near the Commons—that had been closed “improperly,” the judge said.
The judge found that the stores were closed in a bid to counter unionization efforts in the area and absent negotiation with the union that represented those workers. Interestingly, this decision came a year after a previous decision was made for similar reasons, with Starbucks closing a store on College Avenue, where the unionization push got its start.
Is Starbucks Stock a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on nine Buys and 18 Holds assigned in the past three months, as indicated by the graphic below. After a ~1% rally in its share price over the past year, the average SBUX price target of $86.26 per share implies 9.63% downside risk.
