Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
Starbucks Corporation (NASDAQ: SBUX) announced a major leadership change on Tuesday, naming Brian Niccol as its new chairman and chief executive officer, effective September 9, 2024. The news comes amid challenges for the coffee giant, including weak U.S. demand and declining sales in China. Simultaneously, the company faces pressure from activist investors as its stock price has struggled over the past year.
Starbucks Names New CEO and Chairman
Niccol, currently the chairman and CEO of Chipotle Mexican Grill, will take the helm at Starbucks, replacing Laxman Narasimhan, who is stepping down immediately. Rachel Ruggeri, Starbucks’ current CFO, will serve as interim CEO until Niccol’s arrival. Mellody Hobson, the current board chair, will transition to the role of lead independent director.
Niccol brings a strong track record of success in the food and beverage industry. Since joining Chipotle in 2018, he has overseen significant growth, with revenue nearly doubling, profits increasing nearly sevenfold, and the stock price surging by almost 800%. His background includes leadership roles at Taco Bell, Pizza Hut, and Yum! Brands, as well as brand management experience at Procter & Gamble. Niccol holds an MBA from the University of Chicago Booth School of Business and currently serves on Walmart’s board of directors.
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Starbucks Under Pressure from Activist Investor, Stock Surges in Premarket
As Starbucks prepares for new leadership, it also faces pressure from activist investors. Starboard Value has recently taken a stake in the company, joining Elliott Investment Management as significant shareholders. While the size of Starboard’s stake remains undisclosed, both firms are expected to push for measures to improve Starbucks’ stock price and overall performance.
The leadership change and activist involvement come as Starbucks grapples with challenging market conditions. The company has experienced weak demand in the U.S. and a 14% drop in same-store sales in China. Over the past 52 weeks, Starbucks stock has declined by 23%, significantly underperforming the broader market. Year-to-date, SBUX shares are down 18.67%, compared to the S&P 500’s 12.05% gain.
However, news of Niccol’s appointment has been well-received by investors. In pre-market trading on Tuesday, Starbucks stock surged 14.24% to $88.00, up $10.97 from the previous close of $77.03. The company’s market capitalization stands at $87.29 billion, with a price-to-earnings ratio of 21.58 and earnings per share of $3.57. Analysts maintain a positive outlook, with an average price target of $86.40 and a range of $77.00 to $112.00.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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