Elliott management acquires significant stake in starbucks, engages with management

Seattle: According to sources, Elliott Management has taken a notable stake in Starbucks and is in discussions with the company's management to explore ways to enhance its share price. Representatives from Elliott declined to comment on the matter. As of the last disclosure on March 31, Elliott did not hold a stake in Starbucks.

A spokesperson for Starbucks stated that the company does not respond to rumors or speculation. Following the news, Starbucks shares surged by more than 6 percent on Friday.

Elliott Management, known for its active investment strategies and being one of the largest hedge funds globally, has recently acquired significant positions in several companies, including Southwest Airlines, SoftBank, Johnson Controls, and Texas Instruments.

The Wall Street Journal was unable to determine the exact size of Elliott’s investment in Starbucks or its specific demands. However, it noted that a settlement might be possible.

Earlier this year, Starbucks faced activism from its workers' unions, which began organising efforts in 2021. The Strategic Organizing Center ultimately withdrew its candidates, but discussions between management and labor continue.

Starbucks has encountered various challenges over the past few quarters and has experienced several leadership changes in recent years. In April, the company reported disappointing quarterly results, with U.S. same-store sales dropping by 3 percent and traffic declining by 7 percent. Consequently, Starbucks lowered its outlook for 2024.

Additionally, Starbucks reported that rates of incomplete mobile app orders were in the mid-teens, and occasional customers were visiting less frequently.

CEO Laxman Narasimhan, who faces increased pressure, has emphasized the need for store improvements. Narasimhan was chosen by former CEO Howard Schultz to lead the company after the departure of Kevin Johnson. Schultz, who recently commented on Starbucks' challenges, stated he does not plan to return as CEO for a fourth time.