(Bloomberg) -- Elliott Investment Management has amassed a sizable stake in Starbucks Corp., according to a report in the Wall Street Journal, as the coffee chain contends with a pullback in demand.
Elliott is engaging with the company and is pushing it to find ways to boost the stock price, the Journal reported, citing people familiar with the matter.
Starbucks didn’t immediately reply to a request for comment from Bloomberg News. A representative for Elliott declined to comment.
Starbucks shares rose as much as 6.8% on the news, their biggest gain since Nov. 2. Through Thursday, the stock had fallen 23% this year.
Starbucks plunged on May 1 after the company reported its first quarterly sales decline since late 2020. The chain has struggled to keep up with lofty expectations set by previous management. Chief Executive Officer Laxman Narasimhan, who took the company’s helm about a year ago, has had to lower guidance several times.
The chain is looking to reverse the slump by focusing on improving its morning business, which still has more demand than the company can fulfill. It’s also working on new products to attract customers in the afternoons, and rolling out deals on its app to attract budget-conscious customers.
Elliott is known for taking stakes in some of the world’s biggest companies and pushing for changes. The firm last month called for new leadership and a strategy overhaul at Southwest Airlines Co. Earlier this year, it built a stake in Etsy Inc. and one of Elliott’s partners was appointed to the board. Other recent targets have included Texas Instruments Inc., Goodyear Tire & Rubber Inc., Constellation Brands Inc. and Match Group Inc.
But it’s rarer for Elliott to take on a restaurant chain. In 2018, Elliott and fellow activist Sachem Head Capital Management LP persuaded Whitbread Plc to spin off its Costa Coffee chain to compete more effectively against the likes of Starbucks.
--With assistance from Daniela Sirtori and Fareed Sahloul.
(Updates to include background on Elliott in final two paragraphs.)
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