Starbucks has ousted CEO Laxman Narasimhan after less than two years on the job, as the coffee giant struggles with declining sales and customer boycotts linked to its perceived ties to Israel.
The abrupt leadership change, confirmed Tuesday, sees Brian Niccol, the former Chipotle CEO credited with revitalizing the Mexican fast-casual chain, stepping in as the new chief.
The transition follows a tumultuous period for the business, marked by back-to-back quarterly sales declines—down 4% in Q1 and 3% in Q2. The downturn stems from a combination of factors: some consumers tightening their belts on pricey coffee, while others participate in boycotts over the company’s alleged support of Israel amid the ongoing Gaza conflict.
These developments have not gone unnoticed by activist investor Elliott, which has increased pressure on Starbucks’ board after acquiring a significant stake in the company. In the wake of Narasimhan’s departure, Starbucks shares rallied, regaining about 20% on Tuesday, though they remain down 25% over the past year.
The boycott, which intensified following Starbucks’ lawsuit against the Starbucks Workers United (SWU) union for trademark infringement—after the union expressed “solidarity with Palestine” on social media—has had a severe impact on the company.
In March, Starbucks’ Middle Eastern franchisee announced plans to lay off thousands of workers due to the sales slump linked to the Israel-Gaza conflict.
Starbucks has consistently denied claims of financial support to Israel, labeling the accusations as misinformation. Narasimhan, who took the helm in March 2023 after leading consumer goods giant Reckitt, is stepping down amid this storm, with Niccol set to officially start as CEO on September 9. In the interim, CFO Rachel Ruggeri will steer the ship.
“Brian Niccol’s proven track record makes him the transformative leader Starbucks needs in this challenging time,” said Mellody Hobson, Starbucks chairman. As the company navigates these choppy waters, the spotlight is on Niccol to brew up a fresh strategy and restore Starbucks’ global reputation.
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