Starbucks Appoints Brian Niccol as New CEO Amid Sales Struggles

Starbucks Announces Leadership Shake-Up Amid Sales Challenges

In a surprising move, Starbucks has decided to replace its chief executive, Laxman Narasimhan, amid a backdrop of slowing sales for its signature lattes and Frappuccinos, a declining stock price, and rising concerns from activist investors. The coffee giant has appointed Brian Niccol, the current chief executive of Chipotle Mexican Grill, to take the reins starting next month.

Mr. Niccol, who has successfully led Chipotle since 2018, will succeed Mr. Narasimhan, who had a relatively brief tenure that began in March of last year. Narasimhan, the first CEO to come from outside the company, replaced the iconic Howard Schultz. In the interim, Rachel Ruggeri, the chief financial officer, will step in as the acting CEO until September 9. Notably, Mr. Niccol will also assume the role of board chairman.

Analysts and investors have responded positively to the announcement, with Starbucks’ stock experiencing a significant surge, climbing more than 21 percent in morning trading. This swift leadership change comes as the company faces mounting pressures from weakening performance in key markets, particularly in the United States and China. Since the onset of Mr. Narasimhan’s leadership, Starbucks shares have plummeted by over 20 percent.

The concerning drop in stock value, coupled with faltering results in recent quarters, has paved the way for activist investor groups to exert influence. Elliott Investment Management, which began acquiring shares this summer, has been advocating for transformative changes within the company. Last week, another activist group, Starboard Value, joined the push for reform.

Despite the external pressures, Starbucks has framed this leadership transition as a decision driven by its board of directors, rather than as a response to the demands of activist investors.