Lakshman Narasimhan, April 13, 2018.
Guillermo Gutierrez | Photo Bloomberg | Bloomberg | Getty Images
Wall Street’s reaction to Starbucks’ new CEO was sober on Friday morning, with stocks dropping about 1% after the coffee company named restaurant industry outsider Lakshman Narasimhan as its next leader.
Narasimhan will join the company in October and take the top job in April, Starbucks said late Thursday. He succeeds interim CEO Howard Schultz, who was appointed to the coffee giant for the third time earlier this year. Schultz will remain as an advisor and remain on the Board. His BTIG analyst Peter Saleh compared this structure to the co-CEO model in a note to clients.
All eyes are now on Starbucks Investor Day in Seattle on September 13th.
“Importantly, with this adoption, [Starbucks] The focus is shifting to Investor Day 2022,” writes Barclays analyst Jeffrey Bernstein.
The company will announce plans to reinvent the chain and its cafes with bold changes. Schultz has developed this strategy and will continue to be heavily involved in its implementation.
Schultz’s previous resignation sent Starbucks stock down by double digits. When the company announced in late 2016 that then-Chief Operating Officer Kevin Johnson would succeed Schultz, the stock dropped as much as 10% in extended trading. A relative newcomer to the restaurant industry, Johnson joined Starbucks as COO after decades of working in the tech industry.
But Wall Street doesn’t seem too concerned about Starbucks’ latest transition plan. Shares were down less than 1% in long-term trading when the company announced its next CEO Thursday night. In a sign of investor confidence in Narasimhan, shares in his current employer Risol and Durex owner Reckitt fell 5.7% on Thursday after the surprise announcement that he would be leaving later this month. also fell.
“Narasimhan joins from Reckitt, where he oversaw the successful restructuring and could be an invaluable experience for the reinvention that Schultz clearly envisages. [Starbucks]’ said Atlantic Equity analyst Edward Lewis in a note on Friday.
Analysts focused on Narasimhan’s global experience, which could strengthen Starbucks’ sales in emerging markets. His previous roles included heading PepsiCo’s Latin America, Europe and Sub-Saharan Africa operations.
Jefferies analyst Andy Barish wrote that Narasimhan “brings the right kind of fresh perspective, leadership ability and energy” to take Starbucks to the next level.