Can Starbucks Corporation stock move higher without Howard Schultz?

Does Starbucks Corporation (NASDAQ:SBUX) offer investment potential in spite of management changes?


The prospects for the Starbucks Corporation (NASDAQ:SBUX) stock price may seem to be uncertain following the news that Executive Chairman Howard Schultz will leave the firm.

Of course, when Schultz moved from CEO to Chairman, the company appeared to lose its way to some extent. Following his return as Executive Chairman, it seems to have a revitalised strategy and is moving in the right direction in my view.

As a result, it is understandable that investors may be unsure about the company’s future prospects. I wouldn’t be surprised if the Starbucks stock price experienced above-average volatility in the near term as the stock market anticipates what could be a more difficult period for the stock.

In addition, there are concerns about saturation in the US. The company’s comparable store sales in the US have been disappointing in recent periods, and this may suggest that it is running out of growth options.

In my view, the future for Starbucks is in China. The company plans to open 600 stores per year in the country so as to give it an estate of 6,000 in the world’s second-largest economy. This could provide it with a strong growth rate over the coming years, with wage growth and consumerism in China set to continue their advance of recent years.

Further, the company’s plans to develop higher-end products including its Roasteries could also improve sales growth in the near term. Alongside this, the continued expansion of its loyalty scheme may mean that consumer demand becomes increasingly resilient over the coming years. This could equate to lower risk, as well as more pricing power for the business in established locations.

Overall, I think some stock turbulence is to be expected following Schultz’s departure. He has been the key part of the company’s growth story in my view. But with international growth potential in particular, I remain upbeat about the company’s investment prospects.

About Robert Stephens 116 Articles
Robert Stephens is a CFA Charterholder and works as an Equity Analyst. He is a keen private investor and has bought and sold stocks for 15 years, investing in a range of sectors and markets. He has previously written for Seeking Alpha and The Motley Fool, and now runs his own business. If you would like to contact Robert, please email [email protected] or contact him via one of the other methods on the 'Contact Us' page