Howard Schultz to step down as Starbucks chairman

HOWARD Schultz is stepping down as chairman of Starbucks Corp., the international behemoth he built that transformed the way Americans drink coffee.

The move is likely to fuel speculation that the liberal-leaning Mr. Schultz is preparing to run for political office.

For most of the past three decades, Mr. Schultz was the public face of the company and a celebrity himself. By making Starbucks ubiquitous and creating what the company calls a “third place” between home and work, Mr. Schultz also helped change the way Americans socialize. The chain’s white paper cups emblazoned with a green siren were once considered status symbols, as celebrities were photographed carrying them.

“It seems like yesterday that I first walked into the Pike Place store, stepped across the threshold, and was swept into a world of coffee and community. That moment began the journey of a lifetime,” Mr. Schultz, 64 years old, wrote in a letter to employees on Monday, referring to the chain’s first Seattle store. Today, Starbucks has more than 28,000 stores in 77 countries world-wide.

Mr. Schultz laid the groundwork for his eventual retirement in late 2016, when he stepped down as chief executive to lead an effort at the company to build high-end coffee shops aimed at refreshing its brand, which has been facing increasing competition from specialty roasters.

Over the years, Mr. Schultz’s identity and that of Starbucks became synonymous. He created a company that wasn’t just about selling coffee but also stood for his social ideals, which include paying workers—whom he refers to as “partners”—above minimum wage, providing health insurance for part-time employees and taking a stand on issues ranging from same-sex marriage to gun control.

In recent months, Starbucks has been at the center of a debate about race relations after a Philadelphia store manager called the police on two black men who didn’t purchase anything and allegedly refused to leave when asked. The company quickly denounced the manager’s action and came out with a new policy stating that everyone is welcome in its stores. The move was praised by some customers and criticized by others.

Mr. Schultz’s advocacy on social issues has prompted politicians, columnists and others to speculate about whether he might one day run for political office. Mr. Schultz plans to write a book about Starbucks’s social-impact work and its efforts to redefine the role and responsibility of a public company, he told employees.

“I’ll be thinking about a range of options for myself, from philanthropy to public service, but I’m a long way from knowing what the future holds,” he said in the letter.

Mr. Schultz, who will take the honorary title of chairman emeritus, will be succeeded by lead independent director Myron Ullman, former chairman and chief executive at J.C. Penney Co. Mr. Schultz’s last day with the company is June 26, Starbucks said.

When Mr. Schultz announced he would step down as CEO to lead an effort to build high-end coffee shops under the Reserve brand, he said at the time he had no plans to step away from the company.

Mr. Schultz said the plan to build high-end coffee shops would provide an experience that would entice consumers, who are increasingly shopping online, to leave their homes. In April 2017, he officially handed over the reins of the company to Kevin Johnson, a former Microsoft executive who had been on the Starbucks board for many years.

Mr. Schultz, who grew up in a Brooklyn housing project, often referred to his humble roots as the reason he ran a public company with a very personal bent. He often recalled how his family struggled when his father lost his job after breaking his ankle and had no disability assistance.

The company, he has often said, was about being performance-driven “through the lens of humanity.”

Mr. Schultz joined Starbucks as its marketing director just as it was opening its fourth shop. He had become obsessed with Europe’s coffee culture during a visit to Italy and tried to convince Starbucks’s owners to sell espresso, but they disagreed.

He left in 1986 to open his own coffee shop, which he named Il Giornale. He later bought the Starbucks coffee business from the original owners, renamed his own shop Starbucks and went on to expand the brand across the world.

He changed the way Americans drink coffee, and proved that people would be willing to pay several bucks for a commodity product. For Mr. Schultz, it wasn’t just about the coffee—it was about the experience his shops created.

In 1992 he took Starbucks public. The chain experienced rapid growth and became a Wall Street darling. Mr. Schultz decided in 2000 to step down as CEO so he could focus on other interests such as buying the Seattle SuperSonics basketball team and signing musicians to Starbucks’s record label. But in 2007, Starbucks hit a bumpy patch, in part because of the economy and its own rapid growth. There were other missteps, too, including fewer hit products, too much noncoffee merchandise in stores and not enough in-store bean grinding—things he blamed for compromising the chain’s “romance and theatre.”

In early 2008, he returned as CEO and made immediate changes, including slowing the chain’s U.S. growth plans, retraining workers to greet customers more warmly and cutting back on projects such as movie promotions that detracted from the core coffee business. He later decided to close underperforming stores.

Mr. Schultz also sought to keep the company on the leading edge of technology, making Starbucks one of the first food and drink retailers outside of pizza chains to develop a mobile app that allows customers to order and pay for purchases using their phones.

Mr. Schultz, who has a net worth of $2.8 billion, according to Forbes, in some years made the company’s annual meetings a spectacle, featuring celebrities such as Oprah Winfrey, k.d. Lang and Alicia Keys.

The coffee industry has changed in recent years, with many rivals encroaching on Starbucks’s territory. Independent coffee shops have cropped up in urban areas around the country and even convenience stores sell a decent cup of coffee. The competition lately has eaten into Starbucks’s traffic in the U.S., where sales have been slowing. - WSJ

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