Global coffee giant Starbucks (NASDAQ:SBUX) is fighting against the so-called “false claims” made by the Starbucks Workers United union, alleging the company is not allowing decorations for Pride Month. A Twitter tweet by the same name as the union went viral on Tuesday, June 13, with several employees sharing their stories. The union is also claiming that Starbucks is removing the Pride flags from at least 22 store outlets across the nation.
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In response, Starbucks has strongly reiterated its support for the LGBTQ+ community and affirmed that there have been no alterations to any policies pertaining to decorations or celebrations of Pride Month or any other community celebrations. The management is “deeply concerned” about the “false” accusations, as it has always taken pride in supporting the community and has been a vocal supporter of the same. Even so, the coffee maker said that local store leadership and employees have the liberty to make decisions on such accounts.
Here’s What You Need to Know about the Union’s Allegations
Workers are stating that this is the first time in several years that Starbucks has taken this cautious stance. For decades, Starbucks has followed an inclusive policy wherein they have supported transgender workers, extended health benefits to all employees, and even provided insurance coverage for gender reassignment surgery.
Citing some examples, employees claimed that store managers in Massachusetts are avoiding decorations by saying there are not enough labor hours to do them. While in Oklahoma, employees were restrained from doing Pride Month decorations in fear of the recent threats at other retailers, such as Target (NYSE:TGT).
The current controversy arises during a period when Starbucks is already facing heightened unionization pressure. Nearly 300 of the coffee giant’s stores are now union shops, and the management and union are yet to negotiate a befitting contract. SBUX stock has lost 1.9% in the past six months vis-à-vis gaining 40.2% in the past year.
Recent Backlash over Pride Month
The LGBTQ+ community is facing severe backlash from certain groups that even resort to physical assaults. Further, Republican lawmakers are introducing many bills that target the community’s medical care and benefits regime. Recently, there have been several instances of protests and attacks on stores that promote Pride merchandise.
Both Target and Kohl’s (NYSE:KSS) were heavily criticized on social media for selling Pride merchandise, compelling them to discard such merchandise. Also, Anheuser-Busch InBev SA (NYSE:BUD) experienced similar backlash for promoting Pride Month on social media, and protestors even called for a boycott of its Bud Light beer. Shares of these companies declined significantly following the attacks. Most recently, Target stores received threats of bomb attacks, leading to a forced evacuation of the stores.
What is the Future of Starbucks Stock?
Yesterday, Piper Sandler analyst Brian Mullan initiated coverage of SBUX with a Hold rating and assigned a price target of $107 (7.8% upside potential) to the stock. Mullan is cautious about the economic uncertainty, which could impact the company’s second-half 2023 and first-half 2024 performance.
Overall, SBUX has a Moderate Buy consensus rating on TipRanks, based on 12 Buys versus 12 Hold ratings. The average Starbucks price target of $116.47 implies 17.3% upside potential from current levels.
