Latest news with #ElliottInvestmentManagement
Daily Mail
5 hours ago
- Business
- Daily Mail
Southwest CEO justifies controversial shift to ‘Bags Fly Free' policy
On behalf of Southwest Airlines, welcome aboard flight S&P 500 — with nonstop service to Wall Street. In an interview with The New York Times , the airline's CEO, Bob Jordan, was asked how frequently he checks the stock's performance. The answer likely won't come as a surprise to travelers still frustrated over the airline's decision to end its five-decades-long 'bags fly free' policy. 'I watch it constantly. Daily,' Jordan said. In March, the company announced it would start charging customers for checked bags for the first time in the company's history. The day of the announcement, the stock surged 21 percent, boosting the value of Jordan's own shares by an estimated $871,000 . In a statement to a Southwest spokesperson defended Jordan's approach. But that alignment — between stock performance and customer satisfaction — hasn't been so clear to many travelers. The company's bag-checking reversal came after several other transformational shifts, including new basic economy fare tiers , the end of open seating, and the first mass layoff in Southwest's history . Many of the changes followed mounting pressure from activist investor Elliott Investment Management, which took a $2 billion stake in the airline in June 2024. Elliott publicly criticized Southwest's 'outdated' business model — and called for Jordan's removal. Jordan has framed the changes as a response to post-pandemic customer preferences. 'If you don't follow your customers, you look up one day and your products just aren't attractive any longer,' he told the New York Times. 'The move to bag fees is really about choice.' On social media, dozens of customers criticized the CEO's comments about customer choice, saying they came off as 'tone deaf' or even 'gaslighting.' 'Southwest used to be an employee-first airline, then they were customer-first,' one flier wrote in a top-voted Reddit post. 'Now they're shareholder-first.' In March, communications specialists told that the company's baggage fee rollout was especially rough on customers. 'Every company is focused on the bottom line,' Eric Wein, a California-based communications executive, said. 'But it's surprising that Southwest seemed to have lost sight of its customer loyalty and brand appeal in making some of these rather necessary financial moves.' But despite the pushback, the financial upside to the policy changes has been hard to ignore.
Zawya
3 days ago
- Business
- Zawya
Nine months in, Starbucks CEO faces tall order in turnaround
Starbucks CEO Brian Niccol earned a reputation on Wall Street as a miracle worker for wounded restaurant brands like Taco Bell and Chipotle. Nine months into his Starbucks tenure, investors are unsure if lightning will strike a third time. Shares jumped more than 21% on August 13, the day Niccol was named CEO, on hopes he would inject the company with new vitality after several quarters of falling sales and pressure from activist investor Elliott Investment Management. But demand has not yet reversed, Niccol has not shared any financial targets, and the stock remains sluggish. Starbucks shares closed up 0.3% on Wednesday. Niccol's "Back to Starbucks" initiative emphasizes a simplified menu, freshly baked goods, cups with handwritten messages, and speedier service. "The experience of the coffeehouse defines our brand," Niccol told an audience of 14,000 store managers and leaders at a packed Las Vegas stadium in June. He said the company's previous removal of around 30,000 seats in stores as it prioritized mobile orders hurt the business and would be reversed. Starbucks' global same-store sales declined 1% for the quarter ending March 30, the fifth straight quarterly contraction. Analysis from research firm shows regular customers are coming in less often than before Niccol took over, said RJ Hottovy, head of analytical research. A Reuters review of the company's analysis derived from tens of millions of cell phone location points shows average monthly visit frequency has declined in every month of 2025 compared to 2024. The average customer visited 2.4 times in February, compared to 2.48 last February. Even a small decrease spread over millions of visitors is meaningful, said. 'You have to win that trust back,' Hottovy said. Starbucks did not comment on analysis. 'RESULTS WILL FOLLOW' Niccol is accelerating staffing increases to all 10,000-plus Starbucks-owned U.S. stores by the end of the summer, rather than to just a third of U.S. stores, and he describes his changes as "cleaning up some things that have been done in the past while investing in what I think needs to happen,' he told Reuters in Las Vegas. 'The earnings results will follow.' Staffing increases will vary by store, with details to be revealed at an investor day 'at some point in 2026." The lack of clarity is making investors hesitant. Shares have stagnated since his August 13 appointment, while the broad-market S&P 500 is up 15%. The stock's forward price-to-earnings ratio is 33.2, a higher valuation than McDonald's or Yum Brands. Dan Ahrens, portfolio manager of AdvisorShares Restaurant ETF, said his fund is currently avoiding Starbucks because of the uncertainty around the turnaround. "We're in a 'show-me' stage," he said. When Niccol started on September 9, a narrow majority of analysts recommended buying Starbucks stock. Now, more recommend holding or selling. TD Cowen analyst Andrew Charles downgraded shares to 'hold" on May 29, expecting fiscal 2026 earnings to fall short of Wall Street's consensus. "What the Street is trying to figure out is, what's the lift in sales I'm going to get from this?" he said. Bernstein analysts said on July 2 that the staffing surge will cost $1.5 billion to $2 billion in the next two years, but it expects it to reduce turnover and improve same-store sales. TURNAROUND ARTIST Greg Flynn, a restaurant franchisee whose company owns more than 300 Taco Bells, said Niccol 'gets the credit for turning that momentum forward with a relentless parade of new product innovations and exceptional advertising and promotion' as Taco Bell CEO from 2015 to 2018. At Chipotle, same-store sales rose from 2.2% year-over-year in March 2018 when he took over to 31% roughly three years later. Flynn said 'Back to Starbucks' follows that playbook. 'Figure out what people really loved about your brand from the beginning and embrace that,' he said. 'It takes discipline, it takes expenses, and it always meets a lot of opposition.' There are critics in Starbucks' union, Starbucks Workers United, which represents workers at more than 600 locations. Unionized baristas staged walk-outs at dozens of stores in June to protest new dress code restrictions Niccol introduced. Michelle Eisen, a 15-year Starbucks barista who now works for the union full-time, criticized moves such as requiring visitors to pay to use the restrooms or get water, 'neither of which promote a welcoming coffeehouse atmosphere.' Starbucks said changes to its policies came out of discussions with employees and customers. One notable Niccol fan? Former CEO Howard Schultz, who has a history of criticizing those who succeeded him. He physically embraced Niccol on stage in Las Vegas. 'I have never, in my entire life at Starbucks, been more optimistic than I am today,' he said. (Reporting by Waylon Cunningham, Editing by Nick Zieminski)
CTV News
3 days ago
- Business
- CTV News
Nine months in, Starbucks CEO faces tall order in turnaround
Brian Niccol is shown during an interview in New York on June 9, 2015. (Mark Lennihan / AP Photo) Starbucks CEO Brian Niccol earned a reputation on Wall Street as a miracle worker for wounded restaurant brands like Taco Bell and Chipotle. Nine months into his Starbucks tenure, investors are unsure if lightning will strike a third time. Shares jumped more than 21% on August 13, the day Niccol was named CEO, on hopes he would inject the company with new vitality after several quarters of falling sales and pressure from activist investor Elliott Investment Management. But demand has not yet reversed, Niccol has not shared any financial targets, and the stock remains sluggish. Niccol's 'Back to Starbucks' initiative emphasizes a simplified menu, freshly baked goods, ceramic mugs with handwritten messages, and speedier service. 'The experience of the coffeehouse defines our brand,' Niccol told an audience of 14,000 store managers and leaders at a packed Las Vegas stadium in June. He said the company's previous removal of around 30,000 seats in stores as it prioritized mobile orders hurt the business and would be reversed. Starbucks' global same-store sales declined 1% for the quarter ending March 30, the fifth straight quarterly contraction. Analysis from research firm shows regular customers are coming in less often than before Niccol took over, said RJ Hottovy, head of analytical research. A Reuters review of the company's analysis derived from tens of millions of cell phone location points shows average monthly visits have declined in every month of 2025 compared to 2024. The average customer visited 2.4 times in February, compared to 2.48 last February. Even a small decrease spread over millions of visitors is meaningful, said. 'You have to win that trust back,' Hottovy said. Starbucks did not comment on analysis. 'Results will follow' Niccol is accelerating staffing increases to all 11,000-plus Starbucks-owned North American stores by the end of the summer, rather than to just a third of U.S. stores, and he describes his changes as 'cleaning up some things that have been done in the past while investing in what I think needs to happen,' he told Reuters in Las Vegas. 'The earnings results will follow.' Staffing increases will vary by store, with details to be revealed at an investor day 'at some point in 2026.' The lack of clarity is making investors hesitant. Shares have stagnated since his August 13 appointment, while the broad-market S&P 500 is up 15%. The stock's forward price-to-earnings ratio is 33.2, a higher valuation than McDonald's or Yum Brands. Dan Ahrens, chief executive at AdvisorShares, said his fund is currently avoiding Starbucks because of the uncertainty around the turnaround. 'We're in a 'show-me' stage,' he said. When Niccol started on September 9, a narrow majority of analysts recommended buying Starbucks stock. Now, more recommend holding or selling. TD Cowen analyst Andrew Charles downgraded shares to 'hold' on May 29, expecting fiscal 2026 earnings to fall short of Wall Street's consensus. 'What the Street is trying to figure out is, what's the lift in sales I'm going to get from this?' he said. Bernstein analysts said on July 2 that the staffing surge will cost $1.5 billion to $2 billion in the next two years, but it expects it to reduce turnover and improve same-store sales. Turnaround artist Greg Flynn, a restaurant franchisee whose company owns more than 300 Taco Bells, said Niccol 'gets the credit for turning that momentum forward with a relentless parade of new product innovations and exceptional advertising and promotion' as Taco Bell CEO from 2015 to 2018. At Chipotle, same-store sales rose from 2.2% year-over-year in March 2018 when he took over to 31% roughly three years later. Flynn said 'Back to Starbucks' follows that playbook. 'Figure out what people really loved about your brand from the beginning and embrace that,' he said. 'It takes discipline, it takes expenses, and it always meets a lot of opposition.' There are critics in Starbucks' union, Starbucks Workers United, which represents workers at more than 600 locations. Unionized baristas staged walk-outs at dozens of stores in June to protest new dress code restrictions Niccol introduced. Michelle Eisen, a 15-year Starbucks barista who now works for the union full-time, criticized moves such as requiring visitors to pay to use the restrooms or get water, 'neither of which promote a welcoming coffeehouse atmosphere.' Starbucks said changes to its policies came out of discussions with employees and customers. One notable Niccol fan? Former CEO Howard Schultz, who has a history of criticizing those who succeeded him. He physically embraced Niccol on stage in Las Vegas. 'I have never, in my entire life at Starbucks, been more optimistic than I am today,' he said. (Reporting by Waylon Cunningham, Editing by Nick Zieminski)
Reuters
3 days ago
- Business
- Reuters
Nine months in, Starbucks CEO faces tall order in turnaround
July 9 (Reuters) - Starbucks CEO Brian Niccol earned a reputation on Wall Street as a miracle worker for wounded restaurant brands like Taco Bell and Chipotle. Nine months into his Starbucks tenure, investors are unsure if lightning will strike a third time. Shares jumped more than 21% on August 13, the day Niccol was named CEO, on hopes he would inject the company with new vitality after several quarters of falling sales and pressure from activist investor Elliott Investment Management. But demand has not yet reversed, Niccol has not shared any financial targets, and the stock remains sluggish. Niccol's "Back to Starbucks" initiative emphasizes a simplified menu, freshly baked goods, ceramic mugs with handwritten messages, and speedier service. "The experience of the coffeehouse defines our brand," Niccol told an audience of 14,000 store managers and leaders at a packed Las Vegas stadium in June. He said the company's previous removal of around 30,000 seats in stores as it prioritized mobile orders hurt the business and would be reversed. Starbucks' global same-store sales declined 1% for the quarter ending March 30, the fifth straight quarterly contraction. Analysis from research firm shows regular customers are coming in less often than before Niccol took over, said RJ Hottovy, head of analytical research. A Reuters review of the company's analysis derived from tens of millions of cell phone location points shows average monthly visits have declined in every month of 2025 compared to 2024. The average customer visited 2.4 times in February, compared to 2.48 last February. Even a small decrease spread over millions of visitors is meaningful, said. 'You have to win that trust back,' Hottovy said. Starbucks did not comment on analysis. Niccol is accelerating staffing increases to all 11,000-plus Starbucks-owned North American stores by the end of the summer, rather than to just a third of U.S. stores, and he describes his changes as "cleaning up some things that have been done in the past while investing in what I think needs to happen,' he told Reuters in Las Vegas. 'The earnings results will follow.' Staffing increases will vary by store, with details to be revealed at an investor day 'at some point in 2026." The lack of clarity is making investors hesitant. Shares have stagnated since his August 13 appointment, while the broad-market S&P 500 is up 15%. The stock's forward price-to-earnings ratio is 33.2, a higher valuation than McDonald's (MCD.N), opens new tab or Yum Brands (YUM.N), opens new tab. Dan Ahrens, chief executive at AdvisorShares, said his fund is currently avoiding Starbucks because of the uncertainty around the turnaround. "We're in a 'show-me' stage," he said. When Niccol started on September 9, a narrow majority of analysts recommended buying Starbucks stock. Now, more recommend holding or selling. TD Cowen analyst Andrew Charles downgraded shares to 'hold" on May 29, expecting fiscal 2026 earnings to fall short of Wall Street's consensus. "What the Street is trying to figure out is, what's the lift in sales I'm going to get from this?" he said. Bernstein analysts said on July 2 that the staffing surge will cost $1.5 billion to $2 billion in the next two years, but it expects it to reduce turnover and improve same-store sales. Greg Flynn, a restaurant franchisee whose company owns more than 300 Taco Bells, said Niccol 'gets the credit for turning that momentum forward with a relentless parade of new product innovations and exceptional advertising and promotion' as Taco Bell CEO from 2015 to 2018. At Chipotle, same-store sales rose from 2.2% year-over-year in March 2018 when he took over to 31% roughly three years later. Flynn said 'Back to Starbucks' follows that playbook. 'Figure out what people really loved about your brand from the beginning and embrace that,' he said. 'It takes discipline, it takes expenses, and it always meets a lot of opposition.' There are critics in Starbucks' union, Starbucks Workers United, which represents workers at more than 600 locations. Unionized baristas staged walk-outs at dozens of stores in June to protest new dress code restrictions Niccol introduced. Michelle Eisen, a 15-year Starbucks barista who now works for the union full-time, criticized moves such as requiring visitors to pay to use the restrooms or get water, 'neither of which promote a welcoming coffeehouse atmosphere.' Starbucks said changes to its policies came out of discussions with employees and customers. One notable Niccol fan? Former CEO Howard Schultz, who has a history of criticizing those who succeeded him. He physically embraced Niccol on stage in Las Vegas. 'I have never, in my entire life at Starbucks, been more optimistic than I am today,' he said.
Daily Mail
4 days ago
- Business
- Daily Mail
Southwest CEO who made giant sum stinging flyers with extra fees makes telling admission
On behalf of Southwest Airlines, welcome aboard flight S&P 500 — with nonstop service to Wall Street. In an interview with The New York Times, the airline's CEO, Bob Jordan, was asked how frequently he checks the stock's performance. The answer likely won't come as a surprise to travelers still frustrated over the airline's decision to end its five-decades-long 'bags fly free' policy. 'I watch it constantly. Daily,' Jordan said. In March, the company announced it would start charging customers for checked bags for the first time in the company's history. The day of the announcement, the stock surged 21 percent, boosting the value of Jordan's own shares by an estimated $871,000. In a statement to a Southwest spokesperson defended Jordan's approach. 'As CEO, Bob has a responsibility to Southwest's Customers, Employees, and shareholders,' a spokesperson said. 'Our stock price supports the interests of all three groups.' The airline's share price has been on a tear. In the past year, the company's stock has risen more than 22 percent. But that alignment — between stock performance and customer satisfaction — hasn't been so clear to many travelers. The company's bag-checking reversal came after several other transformational shifts, including new basic economy fare tiers, the end of open seating, and the first mass layoff in Southwest's history. Many of the changes followed mounting pressure from activist investor Elliott Investment Management, which took a $2 billion stake in the airline in June 2024. Elliott publicly criticized Southwest's 'outdated' business model — and called for Jordan's removal. Jordan has framed the changes as a response to post-pandemic customer preferences. 'If you don't follow your customers, you look up one day and your products just aren't attractive any longer,' he told the New York Times. 'The move to bag fees is really about choice.' On social media, dozens of customers criticized the CEO's comments about customer choice, saying they came off as 'tone deaf' or even 'gaslighting.' 'Southwest used to be an employee-first airline, then they were customer-first,' one flier wrote in a top-voted Reddit post. 'Now they're shareholder-first.' In March, communications specialists told that the company's baggage fee rollout was especially rough on customers. 'Every company is focused on the bottom line,' Eric Wein, a California-based communications executive, said. 'But it's surprising that Southwest seemed to have lost sight of its customer loyalty and brand appeal in making some of these rather necessary financial moves.' But despite the pushback, the financial upside to the policy changes has been hard to ignore.
