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"Uncle Howie to the Rescue"?

Posted by: Jena McGregor on January 7, 2008


(Posted by Burt Helm and Jena McGregor)

Call him the once and future coffee king. With shares down 47% from 52 weeks ago, Howard Schultz is back in as CEO of Starbucks. And shortly after the news was announced around 4pm EST, everyone from frustrated investors on Wall Street to the baristas around the corner lauded his return. Shares are up 8.8% in after-hours trading, and on (a blog frequented by Starbucks employees) one frequent commenter summed up the general feeling: ““I am most excited to hear this news. Uncle Howie to the rescue!”

But we’ve got to ask: How much difference will Schultz’s return really make? After all, he never really left. It was Schultz who frequently squared off with Maria Bartiromo and Squawk Box’s hosts on CNBC. As Chairman, Schultz was a constant presence on earnings calls, and it was he who penned the infamous leaked memo that lamented “the watering down of the Starbucks experience.”

Perhaps the feeling is that by making Schultz CEO, he’ll play a role in operational decisions that could have a long-term impact on the brand. Remember how he bemoaned the choice to go with automatic espresso machines and vaccuum-sealed coffee pods in the memo. Still, the overarching strategy Starbucks laid out in today’s announcement — slower growth in the U.S., increased focus on the customer — sounds incredibly similar to what the company has been telling Wall Street over the past few months under James Donald.

No doubt Schultz is frustrated and fired up. The stock is in a nosedive and he can’t be happy to see the media call his beloved coffee shop a “filling station,” as a front-page story in the Wall Street Journal did today. Those emotions will go a long way toward energizing the troops, which often happens when iconic leaders return to the helm. But the realities facing Starbucks haven’t changed. And so far as we can see, the company’s strategy and leadership haven’t entirely changed either.



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