May 07, 2024

Starbucks shares slumped due to weaker earnings, as the former CEO advised management to focus on coffee. 

SBUX-–-Daily-Chart SBUX – Daily Chart 

The price of SBUX slumped to $72.90, with support ahead at $68.50. 

Former Starbucks CEO Howard Schultz returned to the firm months ago and left again. However, he’s still offering critiques of the company he ran for 25 years. 

After Starbucks’ latest weak earnings release, Schultz, a key figure in the company’s history, shared his insights on his LinkedIn account. He was asked by “people inside and outside the company” about his thoughts that the chain’s US operations are the “primary reason for the company’s fall from grace”. 

“The stores require a maniacal focus on the customer experience, through the eyes of a merchant. The answer does not lie in data, but in the stores,” Schultz wrote. 

Schulz said the app should “reinvent” its mobile ordering and payment to “once again make it the uplifting experience it was designed to be.” 

Schultz said in his letter that he “experienced some quarters of financial disappointment” during his tenure but added that “there must be contrition and renewed focus and discipline on the core” business. 

Even global giants like McDonald’s are not immune to market challenges. The fast food chain was also struggling with sales hit by ‘the ongoing war in the Middle East’ at restaurants in that part of the world. The effect outweighed sales increases in Japan, Europe, and Latin America. CEO Ian Borden’s comments on the company’s first-quarter earnings call underline the negative effect on its reputation in certain parts of the world. 

The significant drop in the stock price this week is a clear indicator of potential further losses to come, a fact that investors and financial analysts should be mindful of.

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