Starbucks taps former Sam’s Club CEO as No.2 executive

BY Marianne Wilson

Starbucks Corp. has named a former Walmart executive as its next COO.

The coffee giant appointed Rosalind Brewer as group president and COO, effective Oct. 2. She is the first woman, and first African American, to hold such a high post at Starbucks.

Brewer, who joined the Starbucks board in January, served as CEO of Sam's Club, a division of Walmart, from 2012 until she stepped down in January 2017. Prior to that, she spent six years in executive roles at Walmart. Before joining Walmart, she spent 22 years at Kimberly-Clark Corp.

Brewer is highly regarded throughout the retail industry. When she left Sam's Club, Walmart CEO Doug McMillon told employees in a memo that "she wants a new challenge."

Brewer will report to Starbucks' president and CEO Kevin Johnson and serve as a member of Starbucks senior leadership team. In her new role, Brewer will lead the company’s operating businesses across the Americas (Canada, U.S. and Latin America), as well as the global functions of supply chain, product innovation, and store development organizations.

“Starbucks is a culture-first company focused on performance and Roz is a world class operator and executive who embodies the values of Starbucks," said Kevin Johnson, Starbucks president and CEO. "She has been a trusted strategic counselor to me ever since she joined our board of directors, and I deeply value her insight, business acumen, and leadership expertise."

Brewer will continue to serve on the Starbucks board of directors.

“As a passionate customer of the brand and recently-elected board member, I have a deep love and admiration for the Starbucks brand and its people," Brewer said. "I am so honored to have the pleasure of working with the Starbucks leadership team to realize our highest of aspirations for the company and I look forward to working closely with the astute and talented leaders across the enterprise.”


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At Home beats Q2 estimates; raises sales outlook

BY Marianne Wilson

At Home Group is on a roll — and then some.

The fast-growing, value home decor retailer on Tuesday reported its 14th consecutive quarter of same-store sales increases and 13th consecutive quarter of over 20% net sales growth.

In the second quarter ended July 29, At Home's net sales increased 23.2% to $232.1 million, from $188.4 million in the year-ago period. Analysts had expected sales of $227.1 million. Same-store sales rose 7.8%.

Net income totaled $9.5 million, compared to $6.3 million in the second quarter of fiscal 2017. Earnings, adjusted for one-time gains and costs, were 18 cents per share, which just beat estimates.

"Customers continue to respond positively to our trend-relevant assortment of home décor at a compelling value, driving growth in both new and existing stores across a wide range of geographies, price points, everyday and seasonal merchandise," said Lee Bird, chairman and CEO of At Home Group.

Based on its year-to-date performance, At Home raised are raised its 2018 net sales outlook to $916 million to $923 million, up from $906 million to $913 million, driven in part by an annual comparable store sales increase of approximately 3.5%.

"We remain focused on reinvesting in our long-term growth opportunities such as direct sourcing while increasing incentive compensation for our hard-working team members," CFO Judd Nystrom stated. "We are pleased to be reiterating our fiscal 2018 pro forma adjusted EPS outlook of $0.73 to $0.75 despite this reinvestment as well as some third quarter headwinds related to Hurricane Harvey."

At Home opened eight new stores in the quarter and closed one store, which was relocated within its existing market. It ended the quarter with 136 stores in 33 states, which represents an 18.3% increase in stores since July 30, 2016.


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Regulatory Wrap-Up: Obama overtime rule struck down



Overtime: A federal district court judge officially struck down the Obama-era overtime rule which would have raised the overtime threshold to $47,476/yr. The same judge issued a stay of the rule last December. The final decision was based on the argument that job responsibilities, and not just salary levels alone, should have been considered in setting the threshold.

Arizona: A Maricopa County Superior Court judge ruled against the state, nullifying the Arizona wage and benefits preemption law on constitutional grounds. The 2016 preemption law prevented localities from passing minimum wage and employee benefit laws that differ from the statewide rules. The judge found that the new preemption law stood in conflict with an existing law that requires 3/4 majority vote in the legislature to overturn a voter-approved initiative, and the recently passed preemption law failed to meet that standard.

Missouri: Several large city mayors and county executives have announced their joint support for a potential ballot initiative to raise the state’s minimum wage to $12/hr by 2023. St. Louis Mayor Lyda Krewson, Kansas City Mayor Sly James, Columbia Mayor Brian Treece, and St. Louis County Executive Steve Stenger have all made recent announcements in support. The group advocating for the increase, “Raise up Missouri”, needs to collect 100,000 signatures by May 2018 in order to place the question on the November ballot.

Paid Leave

Federal: Some media outlets are reporting that a Republican-sponsored national paid leave measure could be introduced soon after Congress returns from August recess. The bill would likely offer a safe harbor from state and local requirements to employers that voluntarily offer workers a certain amount of paid leave. Despite this movement, a national bill still faces a very uphill climb in Congress.

Pay Equity

Illinois: The governor vetoed legislation that would have banned employers from asking job applicants questions regarding their salary history or from considering past salaries as a factor in hiring decisions or salary offers.

Labor Policy

EEOC: The Trump Administration blocked the Equal Employment Opportunity Commission’s updated requirements regarding employers submission of pay data. The annual EEO-1 form was updated late in the Obama administration to include employee pay data as well as ethnicity, race and gender information. Employers with 100 or more employees are still required to submit the EEO-1 form by March 31, 2018 but are no longer required to add the pay data. This is a different regulation than the SEC’s CEO-Pay ratio data obligations for publicly-traded companies that has yet to be addressed by the administration.

Uber: The Ninth Circuit Court granted the U.S. Chamber of Commerce a temporary emergency injunction blocking a Seattle ordinance allowing for-hire drivers at companies such as Uber and Lyft to unionize. The court will continue to consider a motion to stay the case, pending an appeal of a district court order dismissing the suit.


H-1B: Immigration attorneys are reporting an increase in scrutiny of H-1B visas from the Trump administration. The visa program requires approval from the federal government and attorneys are noticing an increase in government requests for evidence focused on the entry-level wages of many of the H-1B applicant jobs.


Wisconsin: A senate tax committee heard heated testimony last week on several pieces of legislation seeking to establish statewide procedures for assessing property taxes. At issue are longstanding disputes between large format retail chains and municipalities over how their stores are assessed value for tax purposes. The legislation being considered makes several changes to the state property tax system including requiring property to be assessed at "it's highest and best use."

South Dakota: A state Supreme Court judge, during oral arguments in the landmark online sales tax case, suggested that the U.S. Supreme Court should revisit the issue. During the proceedings, the state acknowledged that the economic nexus law passed in 2016 is in violation of the 1992 Quill decision. Attorney General Marty Jackley asked the state’s highest court to affirm the lower court’s grant of summary judgement and open a path to the U.S. Supreme Court.


FCC: The Retail Industry Leaders Association, along with the U.S. Chamber of Commerce and others, announced support for the Federal Communications Commission’s plan to create a database of phone numbers that have been reassigned to new consumers. Retailers and other businesses have faced a growing legal threat from a cottage industry of attorneys representing consumers who have been contacted by a business without consent. This database, likely to include a user fee of some sort, could provide a safe harbor period once a number has been reassigned, greatly reducing the likelihood of errors.


NAFTA: As the second round of NAFTA negotiations between the U.S., Mexico and Canada conclude in Mexico City this week, contentious issues have yet to be resolved. Most notably, reports indicate the rules of origin for automotive manufacturing are presenting serious challenges to all parties. For retailers, third country dumping and seasonal produce issues are of primary concern, although the talks have not revealed any specific public details on those topics. Most experts expect the specific language and other details will be revealed and discussed during the next round, which will be held in Canada later this month.

Joint Employer

U.S. House: A House committee has tentatively scheduled a hearing on the issue of joint employment for the second week in September. The hearing would be the first step in the legislative process for industry-supported legislation designed to limit labor and employment law liability for affiliated businesses. The bill will likely move through the republican-dominated committee but it still has a long way to go. There is currently no companion measure in the Senate, and eight Democrats would need to support the bill to avoid filibuster rules in the upper chamber. Business advocates continue working to marshal enough bipartisan support in the Senate.

Key Takeaways

With action both at the DOL on the overtime issue as well as the EEOC on pay data, the regulatory process with regard to important workforce issues is progressing. Despite significant inaction in Congress, many of our key issues are in play at the agency level. Companies need to not only stay close to this process, but look for opportunities to engage directly with regulators to bring real world operational expertise and perspective to their decision making.

Over the Labor Day weekend, the tone and tenor of Labor Day rallies and other forums was somewhat muted as national stories such as hurricane Harvey maintained center stage. These events that can also be a platform to elevate the dialogue on workforce issues important to operators like minimum wage, pay equity, wage stagnation, paid leave and health care. There was more local and regional coverage that focused on labor events in certain parts of the country but overall, the national impact was minimal.

It is important for all operators to watch the ballot process underway in Missouri as it could be an approach replicated by the labor community nationwide. The effort there for a more modest increase (to $12/hr) stretched over a longer time span (effective 2023) provides an easier road to passage for labor proponents and conversely, makes business community opposition not only harder but additionally, much more politically precarious.

Legislature Status for Week of 9/5/17

• The United States Senate is in session as of Sept 5

• The United States House is in session as of Sept 5

• Ten state legislatures are currently in regular session

• CA, IL, MA, MI, NJ, NC, NY. OH, PA, WI


We've recently launched a podcast that focuses on politics and policy for the restaurant industry. You can listen to the "Working Lunch" podcast by clicking here or subscribe on iTunes here.

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The Regulatory Wrap-Up is presented by Align Public Strategies. Click here to learn how Align can provide your brand with the counsel and insight you need to navigate the policy and political issues impacting retail.


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What will your company do with the tax-reform windfall?