Shares of Starbucks ( SBUX 1.04% ) Stock prices experienced a significant increase this week following the unexpected decision by the coffee company to remove CEO Laxman Narasimhan from his position after only 17 months and appointing a new CEO. Chipotle ( CMG 4.49% ) The next leader of the company will be CEO Brian Niccol.
Niccol is well-respected for joining Chipotle during a difficult period marked by the E. coli outbreak and implementing successful strategies that led to a significant improvement. The stock price has increased by about 800% since that time.
Investors in Starbucks They are clearly expecting Niccol to bring some positive changes to the struggling coffee chain. Based on information from S&P Global Market Intelligence is an information provider. Starbucks stocks had increased by 25.4% by 12:25 p.m. ET for the week. .
Picture credit: Starbucks.
Major development from Starbucks
Narasimhan’s exit was not completely unexpected. Starbucks is struggling with declining profits and decreasing comparable sales for two consecutive quarters. The CEO, who has now left, received strong criticism from investors, including Founder Howard Schultz, particularly following an interview with CNBC’s Jim Cramer. In the interview, he downplayed the notion that the company was losing customers.
The increase in the stock’s value is probably attributed to Niccol’s appointment. Niccol is well-known for his expertise in reviving struggling companies and has direct experience in the restaurant industry, a background that Narasimhan lacked.
The decision was widely praised by Wall Street. Deutsche Bank The stock was upgraded to a buy rating, with one analyst describing the decision as a successful hire. Another analyst from TD Cowen also upgraded the coffee stock to a buy, praising the CEO appointment as exceptional.
What does the future hold for Starbucks?
Reviving the business will be a challenge for Starbucks due to customer complaints about slow service and changes in brewing methods in the U.S. In China, the company is also encountering increased competition from more affordable options. Despite these obstacles, there are opportunities for enhancements.
Starbucks’ recovery is expected to be a long process, but appointing Niccol as the leader is a positive initial move. He is scheduled to assume the position on September 9th.
