Starbucks Stock (NASDAQ:SBUX)
According to a statement released by Starbucks, Laxman Narasimhan assumed leadership responsibilities at the company approximately two weeks earlier than was initially anticipated.
In September 2017, Narasimhan was promoted to the position of CEO. At that time, the firm stated that he has been participating in an “immersion experience” to learn about the Starbucks (NASDAQ:SBUX) business, which includes the company’s three-year goal to reinvent itself.
He succeeds interim CEO Howard Schultz, who has been in charge of Starbucks SBUX +1.16% since April 2022, when former CEO Kevin Johnson stepped down from his position. He takes over the role from Schultz. Howard Schultz, the company’s creator and interim chief executive officer, announced his decision to stand down for the third time on Monday. But, he will continue to serve on Starbucks’ board of directors. In September, Starbucks announced that Laxman Narasimhan would be taking over as the company’s next CEO. He started working for the company on October 1 and has stated that he intends to officially begin his function and join the Starbucks Board of Directors on April 1 of the year 2023. But, he has decided to make this announcement sooner than was first anticipated.
This coming Thursday will be the annual shareholders meeting, and Narasimhan will preside over it. According to the information provided by the company, over the course of the past five months, he has visited more than thirty stores, in addition to manufacturing factories and service centers located all over the world.
Who is Laxman Narasimhan?
Laxman Narasimhan is a seasoned executive who has worked in the field of consumer goods for more than 25 years. PepsiCo, Yum! Brands and Reckitt Benckiser are just a few of the firms where he has held executive positions. From 2019 until 2021, he served as CEO of Reckitt Benckiser. During the time that Narasimhan was employed by Reckitt Benckiser, the company expanded into new markets and product categories under his direction. These new ventures included e-commerce and the production of health and wellness goods. He has a proven track record of being a growth and innovation driver, which has earned him a reputation as a strategic thinker.
What Were the Reasons Behind Howard Schultz’s Resignation?
During his tenure at Starbucks, which spanned more than three decades, Howard Schultz supervised the firm’s growth from its humble beginnings as a single coffee shop in Seattle to its current status as a multinational behemoth operating in more than 32,000 locations across the globe. Yet, Schultz had already been steadily stepping back from his role as CEO for some years before announcing in 2018 that he would be stepping down from his post as executive chairman of the company. At the time, he stated that he desired to concentrate on the charitable and social impact activities that he had been doing. It was simply a matter of time before he also resigned from his job as CEO. He had already resigned from his role as president.
In a letter that he sent to senior executives, Schultz said that having the opportunity and the honor of being a part of Starbucks had been the greatest gift of his life. “I am confident that it will also be yours.”
Former positions held by Narasimhan at PepsiCo (NASDAQ:PEP) include those of global chief commercial officer and chief executive officer of the company’s businesses in Latin America, Europe, and sub-Saharan Africa, respectively.
During a period of transition for the company, Narasimhan will take over the leadership of Starbucks. Not only is Starbucks getting started on its ambitious refurbishment strategy, but the company is also in the middle of a labor movement that is being scrutinized by the regulatory authorities.
On March 29, Schultz is scheduled to provide testimony in front of a Senate Committee regarding the response of the company to unionization efforts.
After Schultz agreed to testify, Senator Bernie Sanders released a statement earlier this month in which he stated that workers in the United States have the constitutional right to organize unions and participate in collective bargaining in order to improve their wages and working conditions. Sanders’s statement was in response to Schultz’s decision to testify. “Unfortunately, Starbucks, which is led by Mr. Schultz, has done everything imaginable to prevent that from taking place.”
Once Narasimhan assumes control of the coffee chain, he will need to find solutions to these problems before he can move forward. On Thursday, he will preside over the first annual shareholder meeting that he has been responsible for convening. At this meeting, shareholders will vote on a series of proposals, one of which asks the board to employ an outside party to analyze how well it adheres to collective bargaining rights.
Starbucks has stated that it is not in violation of any rules involving union organizing, and the company has advised that shareholders vote against the motion in a proxy statement that was submitted to the Securities and Exchange Commission.
In its proxy statement, the company “contends that it complies with U.S. law with respect to freedom of association and the right to collective bargaining.” The company also said that it did not believe that a third-party assessment was “necessary or in the best interest” of Starbucks. “Starbucks contends that it complies with U.S. law,” the statement read.
On Monday, shares of Starbucks rose 1.3% to $100.01, outperforming the S&P 500’s rise of 0.7%. Starbucks stock has increased by close to 15% over the past year, significantly outperforming the S&P 500, which has decreased by 12% over the same period of time. Barron’s recommended investors buy shares of Starbucks in 2022.
What Are Some of the Issues That Starbucks Is Currently Facing?
As it looks to the future, Starbucks is going to have to overcome a number of obstacles. The rising amount of competition is one of the most difficult obstacles. In recent years, there has been an explosion in the number of specialty coffee shops and fast-casual chain restaurants that sell coffee of higher quality at more affordable pricing. In addition, Starbucks has been subjected to criticism from a subset of its clientele who believe that the corporation has become excessively corporate and lacks a human touch. Last but not least, there is the persistent obstacle of having to adjust to the shifting preferences of customers. Starbucks will need to modify both its menu and its business methods in order to satisfy the shifting preferences of its customer base and provide consumers with options that are both healthier and more environmentally friendly.
Featured Image: Pexels @ Dom J