Starbucks is such a major institution that there’s hardly a day when it’s not making the news. With Pumpkin Spice Lattes returning to the seasonal menu and the recent wave of unionized locations, you can’t escape the ’bucks.
Now, the coffee chain is getting a new CEO. Laxman Narasimhan is stepping in this October to take over for the company’s interim CEO, Howard Schultz, by next April. This is Schultz’s third time on as CEO; every time he’s left the company in the past, the Starbucks stock has suffered by double-digits. Schultz will continue advising the company and stay on the board.
But, Starbucks could be in good hands. And it seems investors are confident, as Starbucks stock fell less than 1% in extended trading following the announcement. As former CEO of consumer goods company Reckitt Benckiser, Narasimhan inherited a bit of a mess. He set about restructuring the company to save it, selling off its Chinese baby formula business for US$2.2 billion and oversaw growth in the bulk of its portfolio and company expansion. Plus, he could be a great public face for the company, helping sponsor the 2021 UN Climate Change Conference in Glasgow and publicly pushing for social equality.
“Importantly, this hire removes a major overhang for [Starbucks] shares, with focus now shifting to the ’22 Investor Day,” said Barclays analyst Jeffrey Bernstein.
“I am humbled to be joining this iconic company at such a pivotal time,” Narasimhan said on Thursday.
Schultz called Narasimhan the “right leader to take Starbucks into its next chapter.” He also said to The New York Times: “He’s a true operator and has the DNA of an entrepreneur.”
“Narasimhan joins from Reckitt where he has overseen a successful restructuring, likely invaluable experience for the reinvention Schultz clearly envisages for [Starbucks],” Atlantic Equities analyst Edward Lewis said on Friday.