Investors didn’t appear to be too excited with Starbucks Corp.’s choice for its new chief executive officer, Laxam Narasimhan, but BTIG analyst Peter Saleh said they shouldn’t be surprised that he’s not a coffee guy.
If anything, Saleh said Narasimhan’s global experience could signal that Starbucks will shift its focus to expanding into new geographic areas.
The coffee chain’s stock
SBUX,
-2.88%
fell 2.9% on Friday, with its loss mounting as the broader stock market suffered a sharp reversal from midday.
Market Snapshot: Dow down 338 points at close of Friday session marked by 845-point intraday swing
The consumer-discretionary-sector SPDR ETF
XLY,
-0.92%
fell 0.9% Friday, and the S&P 500 index
SPX,
-1.07%
dropped 1.1%; both had notched strong gains in the morning as Wall Street interpreted the August U.S. payrolls report as a “Goldilocks” story.
Narasimhan, who will step down as CEO of Reckitt Benckiser Group PLC RBGLY UK:RKT on Sept. 30, will join Starbucks on Oct. 1 after relocating to Seattle from London. And after a transition period in which three-time Starbucks CEO Howard Schultz remains interim CEO, Narasimhan is set to fully assume the CEO position on April 1, 2023.
Don’t miss: New CEO of Starbucks — a ‘world-class leader,’ says Howard Schultz — will do a stint as barista.
If it’s of any comfort to Starbucks investors, Reckitt investors seemed sad to see Narasimhan, 55, leave; the company’s U.K.-listed shares dropped 6.1% on Thursday after the news of the CEO’s planned departure. Despite that decline, the stock has rallied 14.5% over the past 12 months through Friday, while Starbucks shares have tumbled 29.2% and the S&P 500 has lost 13.5%.
U.K.-based Reckitt owns many household-name brands, including Lysol, Woolite, Clearasil and Airborne, but no coffee or restaurant brands.
“While Mr. Narasimhan has deep knowledge of the global consumer, he lacks restaurant operating experience,” BTIG’s Saleh wrote in a note to clients.
Still, Saleh reiterated his buy rating on Starbucks and his stock-price target of $110, which implies a 30% upside from current levels.
Before joining Reckitt, Narasimhan, born in India and reportedly a speaker of six languages, held various roles at PepsiCo Inc.
PEP,
-1.27%,
including global chief commercial officer and CEO of the beverage and snack company’s Latin America, Europe and sub-Saharan Africa business, as well as chief financial officer of PepsiCo Latin America and PepsiCo Americas Foods. Before his time at PepsiCo, Narasimhan was a director with McKinsey & Co.
His global experience could provide a boost to Starbucks expansion plans.
“We believe his appointment could set the stage for accelerating growth in emerging markets, where the brand lacks material operation,” Saleh wrote.
And given the Starbucks CEO-hiring history, the fact that Narasimhan lacks restaurant experience shouldn’t be a shock. “His appointment mirrors past CEO transitions including [those to] Kevin Johnson and Jim Donald, neither of [whom] had any external restaurant operating experience,” Saleh wrote.
The surprise, Saleh said, was that Starbucks didn’t wait till its Investor Day on Sept. 13 to make the CEO announcement. The reason might be that making the announcement early allows Wall Street to focus on the strategic plan and long-term algorithm the company lays out at the Investor Day rather than on the new man at the helm, Saleh said.
Who is the new Starbucks CEO? He has ‘deep’ knowledge of the consumer but lacks restaurant experience.
Investors didn’t appear to be too excited with Starbucks Corp.’s choice for its new chief executive officer, Laxam Narasimhan, but BTIG analyst Peter Saleh said they shouldn’t be surprised that he’s not a coffee guy.
If anything, Saleh said Narasimhan’s global experience could signal that Starbucks will shift its focus to expanding into new geographic areas.
The coffee chain’s stock
-2.88%
SBUX,
fell 2.9% on Friday, with its loss mounting as the broader stock market suffered a sharp reversal from midday.
Market Snapshot: Dow down 338 points at close of Friday session marked by 845-point intraday swing
The consumer-discretionary-sector SPDR ETF
-0.92%
-1.07%
XLY,
fell 0.9% Friday, and the S&P 500 index
SPX,
dropped 1.1%; both had notched strong gains in the morning as Wall Street interpreted the August U.S. payrolls report as a “Goldilocks” story.
Narasimhan, who will step down as CEO of Reckitt Benckiser Group PLC RBGLY UK:RKT on Sept. 30, will join Starbucks on Oct. 1 after relocating to Seattle from London. And after a transition period in which three-time Starbucks CEO Howard Schultz remains interim CEO, Narasimhan is set to fully assume the CEO position on April 1, 2023.
Don’t miss: New CEO of Starbucks — a ‘world-class leader,’ says Howard Schultz — will do a stint as barista.
If it’s of any comfort to Starbucks investors, Reckitt investors seemed sad to see Narasimhan, 55, leave; the company’s U.K.-listed shares dropped 6.1% on Thursday after the news of the CEO’s planned departure. Despite that decline, the stock has rallied 14.5% over the past 12 months through Friday, while Starbucks shares have tumbled 29.2% and the S&P 500 has lost 13.5%.
FactSet, MarketWatch
U.K.-based Reckitt owns many household-name brands, including Lysol, Woolite, Clearasil and Airborne, but no coffee or restaurant brands.
“While Mr. Narasimhan has deep knowledge of the global consumer, he lacks restaurant operating experience,” BTIG’s Saleh wrote in a note to clients.
Still, Saleh reiterated his buy rating on Starbucks and his stock-price target of $110, which implies a 30% upside from current levels.
Before joining Reckitt, Narasimhan, born in India and reportedly a speaker of six languages, held various roles at PepsiCo Inc.
-1.27% ,
PEP,
including global chief commercial officer and CEO of the beverage and snack company’s Latin America, Europe and sub-Saharan Africa business, as well as chief financial officer of PepsiCo Latin America and PepsiCo Americas Foods. Before his time at PepsiCo, Narasimhan was a director with McKinsey & Co.
His global experience could provide a boost to Starbucks expansion plans.
“We believe his appointment could set the stage for accelerating growth in emerging markets, where the brand lacks material operation,” Saleh wrote.
And given the Starbucks CEO-hiring history, the fact that Narasimhan lacks restaurant experience shouldn’t be a shock. “His appointment mirrors past CEO transitions including [those to] Kevin Johnson and Jim Donald, neither of [whom] had any external restaurant operating experience,” Saleh wrote.
The surprise, Saleh said, was that Starbucks didn’t wait till its Investor Day on Sept. 13 to make the CEO announcement. The reason might be that making the announcement early allows Wall Street to focus on the strategic plan and long-term algorithm the company lays out at the Investor Day rather than on the new man at the helm, Saleh said.
Source: https://www.marketwatch.com/story/who-is-starbucks-new-ceo-he-has-deep-knowledge-of-the-consumer-but-lacks-restaurant-experience-11662137905?siteid=yhoof2&yptr=yahoo