Laxman Narasimhan, April 13, 2018.
Guillermo Gutierrez | Bloomberg | beautiful pictures
Wall Street’s reaction Starbucks’ new CEO was muted Friday morning, with shares falling about 1% after the coffee company named restaurant outsider Laxman Narasimhan as its next leader.
Narasimhan Starbucks will join the company in October before stepping into the top job in April. He will succeed interim CEO Howard Schultz, who returned to the coffee giant for a third stint in this early year. Schultz will continue to serve as an advisor and continue to serve on the board. BTIG analyst Peter Saleh compared this structure to the co-CEO model in a note to clients.
Now, all eyes are on Starbucks’ investor day in Seattle on September 13.
“Importantly, this lease eliminates a large overhang to [Starbucks] Barclays analyst Jeffrey Bernstein writes.
The company is expected to unveil a reinvention plan that will bring bold changes to the chain and its cafes. Schultz has developed the strategy and will continue to be heavily involved in its implementation.
Schultz’s previous departures have resulted in double-digit declines for Starbucks stock. When the company announced in late 2016 that CEO Kevin Johnson would replace Schultz, shares fell as much as 10% in extended trading. Johnson is a relative newcomer to the restaurant industry, joining Starbucks as COO after decades of working in technology.
But Wall Street doesn’t seem to care much about Starbucks’ latest transformation plan. When the company announced its upcoming CEO Thursday night, shares fell less than 1% in extended trading. In a rally of investors’ confidence in Narasimhan, shares of his current employer, Lysol, and Durex owner, Reckitt, fell as much as 5.7% on Thursday following the announcement. surprise announcement of his passing later this month.
“Narasimhan joined Reckitt, where he oversaw a successful restructuring that could be invaluable experience for the reinvention that Schultz had so clearly envisioned for. [Starbucks]”Atlantic Equities analyst Edward Lewis said in a note on Friday.
Analysts focus on Narasimhan’s global experience, which could boost Starbucks sales in emerging markets. His previous roles include serving as head PepsiCo’s Operations of Latin America, Europe and Sub-Saharan Africa.
Jefferies analyst Andy Barish wrote that Narasimhan “brings a fresh perspective, leadership and energy” to take Starbucks to the next level.
