Starbucks (SBUX) stock is down 25% so far in 2022, and Jefferies Managing Director Andy Barish thinks that union efforts by company employees have created “headline risk” that is affecting the stock.
“I believe it is a contributing factor to some of the stock weakness this year,” Barish told Yahoo Finance Live (video above). “This is really more of a safety, respect, benefits type of grievance —if you will, and it’s not really pay or wages or anything along those lines that might have a significant financial impact.”
The coffee giant faces an array of uncertainties in the near term that include employee efforts to unionize, the recent resignation announcement from its CEO, and the pace of pandemic recovery in China as the country faces another surge in coronavirus cases.
In Barish’s opinion, he’s “fairly comfortable” with the unionization efforts growing within the company, “even if it does result in the company having to negotiate collective bargaining agreements that the financial impact would be relatively immaterial.”
So far, eight stores have voted to unionize. As of March 24, there are 155 Starbucks union elections that are set to be conducted, and there are 70 unfair labor practice cases open against Starbucks.
“If this becomes more of a fight or a battle of words and hopeful just given Starbucks ability to work through a lot of these issues that they’ve seen in the past and being such a progressive employer — we think there’ll be a positive resolution as we move forward here on the union efforts.”
Former CEO Howard Schultz will become interim chief executive on April 4 as the company searches for a permanent successor to CEO Kevin Johnson.
For Barish, Howard coming back on as an “interim basis” would “calm the waters a little bit.”
“Howard is a very understanding and empathetic leader. I think that’ll lead to a more constructive dialogue as things move forward here,” Barish said. “Unlikely that anything will really get solved though in the next six months, which is sort of the anticipated timeframe that Howard will hold the interim role until a new permanent CEO is hired probably in the fall.”
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv
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Source: https://finance.yahoo.com/news/starbucks-union-stock-weakness-analyst-140532994.html