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Starbucks’ No. 2 taking leave of absence

Chief operating officer's time away will begin in March

The Columbian
Published: January 8, 2015, 4:00pm

In a surprising turn, Starbucks said Chief Operating Officer Troy Alstead will take an extended, unpaid leave of absence starting in March.

Alstead is in charge of running the day-to-day operations of the world’s largest coffee company, a job he’s held for less than a year. The post of chief operating officer was created when CEO Howard Schultz announced in January 2014 that he would seek to focus on innovation and big-picture strategy for the company.

Alstead, widely seen as a potential successor for the 61-year-old Schultz, wrote in an email to Starbucks employees that he is taking a “Coffee Break,” an unpaid sabbatical available for people who have been with the company after 10 years. In the note, the 51-year-old said he would devote “the next year” to his wife and children, “to give them my dedicated time and attention.”

Starbucks spokesman Jim Olson said Alstead, who previously held the title of chief financial officer, had talked with Schultz about taking a break as far back as 2008, but the CEO persuaded him to stay to help turn the company around at a critical moment, Olson said.

Now, after having delivered strong financial results and putting the company in a firm position, it’s “the right time to make this decision,” Olson said. “It’s a very personal decision for him.”

Olson said the company will provide more details about transition plans at Starbucks’ first-quarter earnings call, scheduled for Jan. 22. Alstead’s last day will be March 1.

In an internal email to managers, Schultz said Alstead’s decision to take his “sabbatical” was unrelated to concerns about his health or about the company’s performance in the latest quarter. He said speculation to the contrary is “false, off-base and irresponsible.” Starbucks shares were off 1.78 percent in after-hours trading, at $81.02.

David Palmer, an RBC Capital Markets analyst who has long followed Starbucks, said in a note that Alstead’s departure, “if permanent, would be a significant loss for the company,” especially given Schultz’s new mission to “look around corners.” But Palmer added that he believes that the move “has been planned for some time and appears to be for the next year in duration.”

Alstead’s departure comes in the wake of several years of stellar results, but at a time when Starbucks must figure out ways to keep momentum going and investors happy.

Last month the company announced ambitious growth plans — including nearly doubling its annual revenue to about $30 billion by 2019.

Alstead has been with Starbucks for 23 years, joining in 1992, when the company had about 100 stores; now it has more than 20,000. He was one of the pioneers of the company’s international operations and worked in Europe and in China.

“Troy’s humanity and humility will be missed and we wish him the best,” Schultz said in a news release.

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