Starbucks chairman sets the record straight
Howard Schultz tells shareholders that he's disappointed with stock performance, doesn't apologize for the 'leaked' memo, talks up growth plans.
NEW YORK (CNNMoney.com) -- Coffee chain Starbucks Chairman Howard Schultz told shareholders Wednesday that he was disappointed with the company's sluggish stock performance and that he wasn't embarrassed about what he wrote in the "leaked" memo.
"I'm going to try to set the record straight and separate fiction from the truth," Schultz said during the company's annual shareholder meeting in Seattle.
Additionally, the company announced that it has signed on former Beatle Paul McCartney as the first artist to its new record label Hear Music.
McCartney announced during the meeting that his new album is expected to be available in Starbucks stores by early June.
More growth ahead
Starbucks (Charts) shares are down 9.6 percent since its shareholders' meeting a year ago. "This is the first time in our life as a public company that that has happened. I don't feel good about that," Schultz said.
"We can't control the stock price but we can control our long-term strategy and our execution," he emphasized.
Last month, a leaked internal memo in which Schultz expressed concern that the company's rapid expansion was diluting the brand experience for its customers sparked concern on Wall Street.
"Let me try to explain the memo as best I can," Schultz said. "That memo wasn't intended to be critical of or show a lack of trust in this company's management.
"There was some speculation that perhaps it was a signal to Wall Street that we want to slow down growth." Not true, he said, adding that Starbucks plans to open 10,000 new locations over the next four years and increase earnings per share faster than revenue.
"In the future we want to have 40,000 stores worldwide," he said. The company currently operates 13,500 stores in 39 countries.
"However, it is important to step back and ask how we can be as good as we once were. The memo should never have been made public. But I've written hundred of such memos where the common thread is one of self-examination," Schultz said.
To that end, Schultz briefly addressed criticism over the company's trademark disputes with Ethiopia. Ethiopia wants to trademark the names of three of its most famous coffee types, a move that's met with resistance from Starbucks.
Schultz said the issue between the Ethiopian coffee industry and Starbucks had been "mischaracterized," adding that the company was doubling its coffee imports from East Africa, including Ethiopia, and that it would not oppose the Ethiopian government's efforts to obtain trademarks for the country's specialty coffees.
During his presentation, CEO Jim Donald outlined the company's profit and growth plans for the current fiscal year.
Starbucks forecasts full-year earnings of between 87 and 89 cents a share, which is in line with analysts' estimates, according to First Call.
Sales at its stores open at least a year - a key metric of retail performance known as same-store sales - are expected to grow between 3 and 7 percent for the year, and the company plans to open 2,400 new stores worldwide during the year, Donald said.
Revenue is expected to grow 20 percent for the full year.