Starbucks Authorizes Repurchase of Up to 40 Million Shares

Coffee giant Starbucks announced on Wednesday that the company’s board has authorized the repurchase of up to 40 million shares through the end of fiscal 2021.

CEO Kevin Johnson spoke on CNBC’s “Mad Money with Jim Cramer” to defend the move and said, “Look, we’ve got a strong balance sheet, BBB investment credit rating. If you look at our last earnings call, we had $3 billion of cash on the balance sheet, we’ve got a $3 billion line of revolving credit.”

According to Johnson, the approval is “nothing above and beyond” its usual share buyback program.

“We’re being thoughtful and responsible,” Johnson said in the interview.

An existing authorization allows Starbucks to repurchase an additional 16 million shares.

Starbucks is among many companies feeling a negative impact from the deadly coronavirus. The chain said it expects a revenue hit of $400 million to $430 million in the fiscal second quarter due to the Chinese closures. In the United States, the Seattle-based chain has paused the use of seating.

“We’ve modeled every scenario that we think could happen, even extreme scenarios, and we’re going to be just fine,” Johnson said.

Shares closed Wednesday down 4.5%.

Disclaimer: We have no position in Starbucks Corporation (NASDAQ: SBUX) and have not been compensated for this article.