Starbucks Corporation (Nasdaq: SBUX) is closing 8,000 of its U.S. stores on Tuesday so its employees can attend racial bias training. Starbucks stock has struggled to gain momentum in the past several years, and investors are hoping the closings will help the company move past one of the uglier incidents in its recent history.
The training is part of a handful of new initiatives Starbucks is implementing after employees at a Philadelphia location had two black men arrested for waiting for a friend inside the restaurant last month.
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A video of the incident went viral on social media, and Starbucks is now doing everything it can to ensure its customers and investors that it takes racial equality very seriously.
Starbucks worked with the Anti-Defamation League, the NAACP, the Equal Justice League and other organizations in designing the training program. Starbucks has also implemented new store policies, which include allowing customers to spend time in Starbucks stores and allowing them to use the restrooms without making purchases.
Investors won’t know for certain how big of an impact the incident had on Starbucks’ business until the company reports its second-quarter earnings later this summer, but Starbucks was already off to a lackluster start to 2018 even before the negative press. In the first quarter, Starbucks reported an uninspiring 2 percent same-restaurant sales growth. Starbucks stock is now down 8.5 percent in the past year and another 2.6 percent since its problems in Philadelphia started making headlines.
On the company’s first-quarter earnings call, Starbucks CEO Kevin Johnson said Philadelphia backlash has not hurt sales.
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In fact, management guided for same-store sales growth to pick up a bit in the second half of the year, and Bank of America analyst Gregory Francfort says Starbucks investors’ patience may soon pay off.
“Strong 8 to 9 percent unit growth means the company should be able to achieve its earnings per share growth targets as long as comps hurdle the minimum rate to avoid margin deleverage,” Francfort says. “In our view, valuation should skew upward to reflect the scarcity of large-cap growth companies.”
Bank of America has a “buy” rating and $65 price target for SBUX stock.
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Starbucks Corporation (SBUX) Closes Stores For Sensitivity Training originally appeared on usnews.com
