Elliott Holds Significant Stake in Starbucks, Talks With Management

“Elliott has invested heavily in Starbucks and is working with management to boost performance, as CEO Laxman Narasimhan faces pressure to address poor quarterly results“

According to the Wall Street Journal, Elliott Management has acquired a substantial stake in Starbucks and is collaborating with management to identify strategies for enhancing the company’s share price. This information was sourced from individuals who are knowledgeable about the situation.

Elliott representatives declined to respond. As of March 31, the organization’s most recent disclosure, it did not possess Starbucks shares.

According to a Starbucks spokesperson, the organization refrains from commenting on conjecture and speculation. Starbucks’ shares increased by over 6% on Friday.

Elliott is one of the world’s largest hedge funds and one of the most prolific activist investors. The organization has recently acquired substantial positions in Southwest, SoftBank, Johnson Controls, and Texas Instruments.

The Journal could not determine the extent of Elliott’s position or its specific demands; however, it acknowledged the possibility of a settlement.

Earlier this year, Starbucks faced an activist campaign from its workers unions. After an organization effort that commenced in 2021, the Strategic Organizing Center withdrew its candidates due to that endeavor. Management and labor are currently engaged in discussions.

Starbucks has encountered numerous obstacles over the past few quarters and has implemented numerous leadership changes in recent years. The company disclosed disappointing quarterly results in April, which included a 3% decline in U.S. same-store sales and a 7% decrease in traffic. Additionally, the coffee chain reduced its projections for 2024.

Starbucks reported incomplete mobile app orders at a rate in the mid-teens and reported a decrease in the frequency of visits from occasional consumers.

CEO Laxman Narasimhan, currently experiencing increased pressure, has acknowledged the necessity of enhancing the quality of the stores.

Starbucks CEO Howard Schultz, who returned to the company, personally selected Narasimhan to succeed him following the resignation of his predecessor, Kevin Johnson.

Despite his recent commentary regarding Starbucks ‘ obstacles, Schultz has expressed his intention to refrain from serving as CEO for a fourth consecutive term.