A decision announced on Tuesday (13/8) boosted the market value of the American company Starbucks, after a long crisis on the stock exchanges, falling results, pressure from Elliott, an activist manager who recently bought a significant stake in the company, and damage to its own image. The coffee retail giant announced the change of its CEO to Brian Niccol, who has a successful career in retail and was previously CEO of the burrito chain Chipotle.
With the announcement, shares of the Seattle-based chain rose more than 24.5% on the New York Stock Exchange, marking their best intraday climb since its initial offering in 1992, according to data from FacSet, Forbes reported. On Monday (12/8), shares were trading about 20% below the price in August 2019. Laxman Narasimhan, who had been at the helm of the company for almost a year and a half, resigned with immediate effect. His management, with falling sales, price increases and union conflicts, was questioned by investors.
A seasoned leader, Niccol served as CEO of Taco Bell from 2015 to 2018 and serves on the board of directors at Walmart. He has a reputation for efficiency and dedication to organizational culture. During his tenure at Chipotle since February 2018, revenues have nearly doubled, profits have increased nearly sevenfold, and the stock price has increased nearly 800%.
Starbucks founder and chairman emeritus Howard Schultz welcomed the decision. Despite having chosen Narasimhan as CEO himself, he has publicly called for changes to the company in recent months. “His excellence in retail and track record of delivering shareholder value demonstrate the human element needed to lead a culture- and values-driven company,” he said of Niccol. “I believe he is the leader Starbucks needs at a pivotal moment in its history.”
“I have long admired Starbucks’ iconic brand, unique culture and commitment to enhancing human connections around the world.
As I embark on this journey, I am energized by the enormous potential to drive growth and further enhance the Starbucks experience for our customers and partners.”Brian Niccol
Niccol will take over Starbucks on September 9th and will face the mission of recovering the company's results and reputation. In recent months, the chain has been facing a slowdown in sales, partly as a result of customers' disenchantment with long waits in lines at stores – where previously the special service and exceptional experience they provided were their biggest attractions. This is also the effect of what experts call a devaluation of the brand itself.
In the United States, the solution for the company to get back on track would involve improving operations and increasing store efficiency, analysts say. In China, its second largest market, however, the problems would be greater due to competition and the economic downturn. Brazil is a special case. Here, the chain was managed by SouthRock, which, after many operational difficulties and undergoing judicial recovery, lost the right to use the brand. Zamp, which already operates Burger King and Popeyes in Brazil, won the process to acquire assets and rights to the operations of Starbucks stores in the country, as per notice released on the 8th.
Until Niccol joins, CFO Rachel Ruggeri will take over as interim CEO. Now, the hope is that Starbucks will regain its reputation from its better days.
