US-based coffee giant Starbucks is under increasing pressure from activist investors as it grapples with declining sales and a sagging share price, the Wall Street Journal (WSJ) reported.
Hedge fund Starboard Value has acquired a stake in the company, joining fellow activist Elliott Investment Management on the shareholder roster.
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According to the WSJ, while details of Starboard’s specific demands remain undisclosed, the move underscores the growing discontent with Starbucks’ current strategic direction.
Elliott, which has already initiated discussions with Starbucks management, is reportedly considering a proxy battle to secure board representation if negotiations fail to yield desired changes.
The potential for multiple activist campaigns adds to the complexity of the situation for Starbucks CEO Laxman Narasimhan.
The company has faced significant challenges this year, including declining sales in key markets such as the US and China.
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By GlobalDataIn response, Starbucks has cut its financial guidance twice and is exploring strategic options for its Chinese business.
The news agency reported Narasimhan has outlined plans to revitalise the brand and improve operational efficiency, but progress has been slow.
Adding to the pressure is the ongoing involvement of former CEO Howard Schultz, who remains a major shareholder and has been vocal about his concerns with the company’s direction.
Schultz’s public criticism could further erode investor confidence and complicate the company’s efforts to appease activist demands.
Starbucks is no stranger to activist involvement.
Both Starboard and Elliott have a history of targeting underperforming companies and pushing for significant changes.
The coffee chain’s ability to navigate this turbulent period will be critical to its long-term success.
Industry analysts will be closely watching how Starbucks responds to these pressures and whether the company can successfully implement a turnaround strategy that satisfies both shareholders and customers.
