Starbucks to unveil ‘reinvention’ strategy at investor day on Tuesday

Starbucks is expected to unveil a reinvention plan Tuesday as the coffee giant grapples with changing consumer behavior, outdated store designs and a union push in the U.S.

The strategy is the brainchild of outgoing interim CEO Howard Schultz, who returned to the top job in the spring after Kevin Johnson’s retirement. Schultz will cede the reins to incoming CEO Laxman Narasimhan in April but will stick around to help implement the plan.

Starbucks said Tuesday’s investor day in Seattle will feature presentations and a question-and-answer session with leadership, but it is unclear if Narasimhan will speak with investors for the first time.

Schultz’s new strategy is meant to address how the coffee chain plans to drive growth in a post-pandemic world. Shares of the company are off 24% year to date, dragging its market value down to $102 billion. A slow recovery in China, the union push in the United States and broader economic uncertainty have weighed on the stock, but Wall Street’s approval for the reinvention plan could reinvigorate shares.

In August, Schultz told investors the plan will tackle “increasing efficiency” in U.S. cafes, with consumer behavior changing in the wake of the pandemic. Customers are increasingly ordering their coffees from their phones or drive-thru lanes instead of sitting in cafes. Three-quarters of drink orders in its latest quarter were cold beverages, usually with pricey add-ons.

But the company is also looking to soothe baristas who have complained about understaffing and feeling overworked. More than 230 company-owned cafes in the U.S. have voted in favor of unionizing under Workers United. The company, led by Schultz, has been working to curb union support through efforts like refusing to extend higher pay to unionized cafes and firing organizers.

The union push has slowed in recent months, but Starbucks is still grappling with high turnover. A quarter of U.S. baristas are quitting their jobs within 90 days, up from roughly 10% before the pandemic, according to The Wall Street Journal.

Additionally, Wall Street is expecting an update on Tuesday to the company’s long-term outlook. In May, Starbucks suspended its fiscal 2022 forecast, citing lockdowns in China, investments in its U.S. employees and high inflation.

The company’s previous long-term forecast projected adjusted earnings per share growth of 10% to 12%, revenue growth of 8% to 10% and global same-store sales growth of 4% to 5%. Barclays analyst Jeffrey Bernstein wrote in a note to clients that he believes most investors would prefer the company modestly lower its outlook so it can consistently beat expectations and raise its forecast.

In its latest quarter, Starbucks reported global same-store sales growth of 3%, fueled by strong demand in its home market. But Covid-19 restrictions in China hammered its same-store sales growth in that market, its second largest.

Tuesday’s investor day is scheduled to begin at 10:30 a.m. and conclude by 6 p.m. ET.