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Starbucks Stock (NASDAQ:SBUX) in Focus as Union Pressures Peak
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Starbucks Stock (NASDAQ:SBUX) in Focus as Union Pressures Peak

Story Highlights

Starbucks employees’ growing discontent and unionization efforts are drawing more negativity towards the stock. The Union has accused Starbucks of withholding wages and benefits as well as closing stores in retaliation.

American coffee chain Starbucks Corporation (SBUX) is facing severe problems related to unionization across the nation. As per a National Labor Relations Board (NLRB) complaint, Starbucks illegally withheld wages and benefits from union workers. The NLRB aims to recover the same for the union workers since May.

The report also demands that CEO Howard Schultz reiterate the union rights of workers. NLRB has also asked Starbucks to produce old payroll records and details to calculate how much the coffee house owed to workers.   

Why is Starbucks being Stringent with its Workers?

Since 2021, more than 230 locations of the coffee chain have voted to join the Starbucks Workers United union. Starbucks’ board stated that these stringent steps were taken to demoralize the unionization efforts. On the other hand, the company denied the Board’s stance and stated that it has been strictly following NLRB norms in giving benefits to its employees.

Earlier in July too, the company had mentioned that it cannot legally change the wages and benefits without bargaining with the union once they were in place.

The Starbucks Workers United union has also complained that the company has fired over 75 union leaders since December last year. Last week, a federal judge asked Starbucks to recall seven baristas who were fired for unionization efforts at a Memphis store.

Starbucks Closes Two More Stores

This Monday, Starbucks notified workers at two of its stores, one in Kansas City, Missouri, and the other in Seattle, Washington, that it would be closing down these stores. While the company claims that these stores have been shut due to safety concerns, the union claims these were shut in retaliation to the union activities.

A Starbucks spokesperson said, “We apply the same focus on safety at unionized and non-union stores and are closing non-union stores where we are similarly challenged in providing a safe environment for our customer and partner experience.”

Notably, Starbucks has closed 19 stores in the past few months. The union said that 42% of these had union activity. In July, the company noted that a rise in homelessness and crimes had forced the coffee chain to shut stores in 16 locations.

Is SBUX a Buy Today?

Analysts on the Street are cautiously optimistic about SBUX stock. On TipRanks, SBUX stock has a Moderate Buy consensus rating based on nine Buys versus ten Holds. The average Starbucks price forecast of $92.89 implies nearly 8% upside potential to current levels. Meanwhile, the stock has lost 24.9% so far this year.

Parting Thoughts

Starbucks is struggling with unionization efforts across most of its stores in the U.S. The current case with NLRB can be settled outside the court or an administrative judge will hold a hearing on the same on October 25.

Furthermore, the company is dodging inflationary pressure, which is threatening the demand for its premium coffee offerings. Moreover, the entrance of rival UK coffee chain Costa Coffee in North America has made the market more challenging. Amid the chaos, analysts are being cautious about the stock’s trajectory, and it may be wise to wait on the sidelines until the dust settles.

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