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Starbucks is doing better than ever after Howard Schultz

This year has been filled with transition and turmoil at Starbucks. But don't tell that to Wall Street....

Posted: Nov 30, 2018 6:06 PM
Updated: Nov 30, 2018 6:06 PM

This year has been filled with transition and turmoil at Starbucks. But don't tell that to Wall Street.

Despite negative publicity in 2018 that stemmed from the arrests of two black customers in a Philadelphia store in April, worries about more competition from Dunkin' and McDonald's and the retirement of its iconic leader Howard Schultz, shares of Starbucks are up more than 15% this year and are not far from an all-time high.

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Starbucks (SBUX) CEO Kevin Johnson has had to make some tough decisions that appear to be paying off.

Johnson was widely praised for how Starbucks handled the aftermath of the Philadelphia incident. He personally apologized and vowed to do better. Starbucks ultimately decided to close more than 8,000 stores for a few hours in late May for racial bias training.

In late June, shortly after Schultz said he would step down as executive chairman, Starbucks announced it would shutter 150 underperforming US stores this year -- triple the usual amount of annual closures.

Johnson had to make some bold moves quickly

Shares of Starbucks fell more than 9% on that news -- and the stock continued to slide. It hit a 52-week low in late June.

That brought back painful memories of when Schultz last took a break from Starbucks. He stepped down as CEO in 2000 but wound up coming back as CEO in 2008 after sales started to slump and the stock tanked.

Schultz eventually helped lead a big comeback for Starbucks with aggressive moves into China and other overseas markets.

That set the stage for Schultz to eventually step aside again as CEO. In 2015, Starbucks hired Johnson, the former CEO of Juniper Networks (JNPR) and a veteran of Microsoft (MSFT) and IBM (IBM).

Johnson took over as CEO in April 2017, but it wasn't until Schultz decided to step down as executive chairman this year that Johnson truly had the spotlight to himself. And he was quickly thrust into crisis mode.

But Johnson was vindicated after Starbucks reported earnings and revenue that topped forecasts for both the third and fourth quarter in July and November.

Sales in the company's two biggest markets -- the United States and China -- are rebounding. The company's bet on mobile ordering and payments have been a hit, too. Mobile now accounts for nearly 15% of all transactions in US stores.

A new global licensing deal with Nestle to make and sell Starbucks-branded coffees and teas has been praised by analysts. Starbucks also continues to expand internationally. It finally opened its first location in Italy in September.

Even activist investor Bill Ackman seems pleased. His fund recently bought a $900 million stake in Starbucks but is not pushing for any major changes, saying he's pleased with the actions Johnson has taken.

So it seems that Starbucks is in good hands with Johnson.

It helps that he also has a pretty potent management team behind him, most notably Rosalind Brewer, the former CEO of Walmart's (WMT) Sam's Club division. She joined as COO of Starbucks in September 2017.

As for more competition from Dunkin' Brands (DNKN) and McDonald's (MCD), it seems that a proverbial rising tide is lifting all boats.

With the US economy in solid shape, unemployment at a nearly 50-year low and wages rising, consumers seem willing to spend at multiple places for their coffee.

That means Starbucks can thrive even as its competitors are also doing well.

Minnesota Coronavirus Cases

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Cases: 486434

Reported Deaths: 6575
CountyCasesDeaths
Hennepin1009131586
Ramsey43165803
Dakota36375392
Anoka33335388
Washington22121258
Stearns18752201
St. Louis14822263
Scott13308107
Wright12538116
Olmsted1181788
Sherburne874172
Carver775640
Clay692387
Rice670791
Blue Earth596635
Kandiyohi579674
Crow Wing521282
Chisago499545
Otter Tail483270
Benton447790
Winona418549
Mower405731
Douglas393368
Nobles387247
Goodhue386269
Polk343763
McLeod340049
Beltrami338651
Morrison324747
Itasca313646
Lyon313644
Becker312542
Isanti306756
Steele301511
Carlton300149
Freeborn282623
Pine282016
Nicollet259241
Todd248330
Brown245537
Le Sueur235720
Mille Lacs227947
Cass220424
Waseca209317
Meeker207434
Martin189928
Wabasha18673
Roseau180317
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Houston157414
Dodge15294
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Pennington136316
Cottonwood135020
Wadena131020
Faribault123417
Aitkin119033
Watonwan11758
Sibley117310
Rock115914
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Murray9488
Jackson93610
Swift87918
Pope8075
Marshall78015
Lake74218
Stevens7418
Clearwater71914
Lac qui Parle68516
Wilkin67411
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Lincoln5092
Grant4918
Norman4788
Unassigned44568
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Kittson40921
Red Lake3625
Traverse3075
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Cook1180

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 335218

Reported Deaths: 5443
CountyCasesDeaths
Polk51785551
Linn19463313
Scott17080210
Black Hawk14924292
Woodbury13778212
Johnson1312174
Dubuque12416194
Dallas1019092
Pottawattamie9828143
Story959345
Warren511674
Clinton500784
Cerro Gordo498882
Webster494487
Sioux479169
Marshall463072
Des Moines427161
Muscatine424191
Buena Vista412237
Wapello4025108
Jasper386266
Plymouth367478
Lee354252
Marion339869
Jones284654
Henry279637
Bremer268754
Carroll266349
Crawford252235
Boone242830
Benton240354
Washington239047
Mahaska215246
Jackson209738
Dickinson202440
Tama202365
Kossuth198055
Delaware185540
Clay183825
Winneshiek182827
Fayette178635
Page177819
Buchanan176929
Wright173831
Hamilton173742
Cedar171523
Hardin169439
Harrison167169
Clayton159854
Butler158831
Mills147920
Floyd147741
Poweshiek147730
Lyon145541
Cherokee145336
Allamakee142347
Madison141918
Iowa139423
Hancock137630
Grundy132030
Winnebago130231
Calhoun129311
Cass128751
Jefferson128334
Appanoose123147
Louisa122341
Mitchell120440
Chickasaw119615
Union118731
Sac118318
Shelby116433
Emmet115040
Humboldt113525
Franklin109019
Guthrie108928
Palo Alto100921
Howard99021
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Clarke94720
Keokuk92029
Monroe89428
Adair81028
Ida81032
Pocahontas80919
Davis76323
Monona76327
Greene72910
Lucas71421
Osceola68215
Worth6667
Taylor64112
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Van Buren53718
Ringgold50520
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