Former Starbucks CEO says company needs to revamp its stores after big earnings miss

Former Starbucks CEO Howard Schultz weighed in Sunday on the coffee chain’s dismal latest quarterly report, saying he believes the company will recover if it improves its U.S. stores.

Schultz, who no longer has a formal role within Starbucks, sees an obvious reason for the downturn. He wrote that the company needs to improve its mobile order and pay experience and overhaul how it creates new drinks to focus on premium items that set it apart.

“The stores require a maniacal focus on the customer experience, through the eyes of a merchant. The answer does not lie in data, but in the stores,” Schultz wrote in a letter on Sunday evening posted to LinkedIn.

On Tuesday, Starbucks slashed its full-year forecast after a surprise decline in same-store sales led the company to miss Wall Street’s estimates for quarterly earnings and revenue. Since the report, the company’s shares have fallen 17%, dragging its market value down to $82.8 billion.

Analysts, caught off guard by the chain’s underperformance, have been looking for an explanation for why Starbucks’ U.S. traffic fell 7% in the quarter. The chain could still be dealing with the repercussions of social media backlash related to its position on conflict in the Middle East, Bank of America Securities analyst Sara Senatore wrote in a research note on Monday.

Schultz, who turned Starbucks from a small chain into a coffee giant, stepped down from his latest stint as chief executive a little over a year ago. He handed the reins over to Laxman Narasimhan, who previously was CEO of Lysol owner Reckitt. Schultz also stepped down from the Starbucks board last year.

He appeared to offer advice to his successor as he tries to turn the chain’s sales around.

“Leaders must model both humility and confidence as they work to restore trust and increase performance across the organization,” Schultz wrote.

A year and a half ago, Schultz told CNBC that he does not plan to come back as Starbucks’ chief executive again.