Starbucks needs a caffeine boost; Brian Niccol could be it.
50, will replace Laxman Narasimhan as CEO sent the shares soaring 23% on Tuesday. Niccol will take the helm on Sept. 9, while Starbucks CFO Rachel Ruggeri will serve as interim CEO to bridge the gap.
Wall Street pros say that unlike Narasimhan, who lasted less than 18 months on the job, Niccol will have more rope due to his track record. New items like popping boba-like pearls and iced energy drinks had big launches but the effect didn't last, said Bernstein analyst Danilo Gargiulo. The company is also struggling with its perception of pricy drinks and slow service, as well as ineffective marketing and rewards programs in the age of digital ordering.
"Early assessments demonstrate the capability to drive a 10- to 20-second wait time reduction," he said. "We believe a similar playbook can be implemented at Starbucks that will complement automated equipment efforts," Charles wrote. "Intense competition is the natural state of restaurant markets and even the strongest brands are not insulated," she said. "The direction of SBUX's China same-store sales growth is strongly correlated with those of other global brands. And all are correlated with macro factors .") amid rising nationalism and unstable macroeconomic conditions. The company still aims to have 9,000 locations in China by 2025, from its current 7,306 stores.
"We suspect that between his own excellent record and investors' deep discontent with the status quo, Niccol should have carte blanche to make sweeping organizational changes," Dunlop wrote in a note to clients.
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