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Starbucks' departing CEO: One currency matters most with the consumer

Starbucks (SBUX) said Thursday that Howard Schultz would be leaving his post as CEO to focus on the coffee giant’s premium stores as well as its social initiatives.

The company’s current COO, Kevin Johnson, will take over the top role.

Schultz told the Wall Street Journal he has no plans to run for office, as some have speculated, and that he plans to remain at Starbucks as chairman while he focuses on growing the chain’s higher-end coffee shops that are similar to its roastery.

His transition is aimed at revitalizing the Starbucks brand, which has seen more competition in recent years from companies like Stumptown and even Dunkin’ Donuts, the Journal pointed out.

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Despite the competition, Starbucks reported better-than-expected results last quarter. Back in May, Schultz spoke to Yahoo Finance about how Starbucks was able to post strong growth in a tough retail environment.

“One major retailer after another posts numbers that are somewhat disappointing,” Schultz said. He added, foreshadowing the chain’s increased focus on its high-end stores, “What it says is that this is not a time to embrace the status quo, that experiences matter.”

But experiences are not the only things that matter to customers. “I think the currency that matters most is your values and the trust with the consumer,” Schultz said. “And I think that’s what we’ve tried to do, if you look at all the things we’ve done around social impact.”

The missing ingredient for many retailers, according to Schultz, is an emotional connection with the consumer — something that Starbucks has emphasized.

Starbucks CEO Howard Schultz Credit: AP Photo/Ted S. Warren, File
Starbucks CEO Howard Schultz Credit: AP Photo/Ted S. Warren, File

“I think this is a challenging time, and it’s going to take the ability of companies to navigate through the storm,” he said. “I think over the long term, the things that we’re doing, the investments we’re making, the focus we have on innovation, product, technology, our own people, and obviously the experience that we’ve been creating with the roasteries, all speak to the fact that we’re building a great, enduring company that will not be affected by the current issues.”

While traditional retailers from Macy’s (M) to Nordstrom (JWN) to Target (TGT) continued to report decelerating trends this spring, Starbucks posted a 6% increase in comparable store sales for its second quarter, the company’s 25th consecutive quarter at or above 5%. By the fourth quarter, same-store sales had cooled off to just 5%.

Schultz conceded that even Starbucks is not immune to consumer behavior changes and that he takes seriously the responsibility to change with the times.

“Anyone that knows me knows that I worry about a lot of things,” Schultz said. “We don’t want to take anything for granted.”

Nicole Sinclair is markets correspondent for Yahoo Finance.