Starbucks (NASDAQ:SBUX) stock is retreating more than 5% in early trading to $87. The shares are falling after interim CEO Howard Schultz announced that the company would immediately halt its buybacks of SBUX stock.
“This decision will allow us to invest more into our people and our stores — the only way to create long-term value for all stakeholders,” Schultz said in a statement.
Last quarter, the coffee shop owner bought back $3.48 billion of SBUX stock.
Now, Schultz is back in the CEO seat and appears to be shaking things up. After founding Starbucks in 1971, Schultz has had two long stints as CEO. His most recent time at the helm, which began today, is only expected to last until Starbucks names a permanent CEO in the fall. Schultz is 68 years old.
What Happened With SBUX Stock
In addition to supply chain issues and high labor costs in the United States, SBUX stock has been hurt this year by several developments in China, its second-largest market after the U.S. There, Covid-19 lockdowns, lower airport traffic and increased competition have eroded Starbucks’ results. Last quarter, its same-store sales in the Asian country tumbled 14% year over year. Heading into trading today, SBUX stock had tumbled 22% in 2022.
On March 16, JPMorgan Chase raised its rating on SBUX stock to “overweight” from “neutral.” The firm expects China’s Covid-19 issues to ease in the long run. It also predicted that Starbucks would be able to implement price hikes while still keeping its “‘affordable luxury’ status.” It placed a $101 price target on the name.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.