Coffee retailer Starbucks Corp. is raising employee pay rates in the US by at least 10%, Business Insider reported citing an internal company memo. The new pay structure will be rolled out by December 14.
In a statement to Business Insider, Starbucks’ (SBUX) representative Reggie Borges said “this announcement is the next phase of its commitment to ensuring the well-being of partners with one of the most significant investments to hourly pay in the US in the history of the company.” Borges added that “We have a multi-year aspiration to make more meaningful investments in pay as it continues to rebuild and grow the business.”
The wage hike would include pay increases of at least 10% for all baristas, shift supervisors and cafe attendants. The company would also give a pay hike of at least 11% to those workers who have served for three years. Starbucks’ starting pay rates will also rise by at least 5%. However, according to the report, some of the employees were not satisfied with the wage changes and demanded a minimum wage of $15 across the US. (See SBUX stock analysis on TipRanks)
On Nov. 2, Stephens analyst James Rutherford maintained a price target of $86 (12.2% downside potential) and a Hold rating on the stock due to Starbucks’ valuation. Meanwhile, the analyst believes that that the company “is on track for a full sales recovery,” and remains impressed with the growing pace of recovery in comparable-store sales in the US and China.
Overall the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 9 Buys and 10 Holds. The average price target stands at $94 and implies downside potential of about 4% to current levels. Shares have risen by about 11.4% year-to-date.
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