Laxman Narasimhan may not have any experience running a coffee shop, but Reckitt, the outgoing CEO of the British Packaged Goods Group, will be briefing on changing consumer habits when he takes over at Starbucks.
At Reckitt (RKTL), a maker of Strepsils throat lozenges and Dettol floor cleaners, Narasimhan, 55, honed relationships with retailers ranging from Walmart (WMT.N) to Tesco for a comprehensive, but incomplete, corporate turnaround. led. (TSCO.L).
When he joins Starbucks in October, Narasimhan will have to adapt his focus to serving the millions of people who step into the coffee chain’s nearly 32,000 stores every day.
But his background, which includes a several-month stint as chief commercial officer of PepsiCo (PEP.O) in 2019, should ensure a smooth transition for Starbucks, analysts said.
“I don’t think they had a physical exposure to running direct-to-consumer businesses or retail networks,” said Credit Suisse analyst Eamon Ferry.
“He doesn’t have any direct coffee experience, so you can question that. However, he has a deeper understanding of the consumer and that’s far more important,” Ferry said.
Narasimhan is replacing interim CEO Howard Schultz, who rejoins the series for the third time since former CEO Kevin Johnson retired this spring.
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Starbucks identified Narasimhan a year ago as a potential successor to Johnson as he was strategizing the coffee chain’s future and evaluating both internal and external candidates, sources familiar with the matter said.
LONDON, Sep 2 (Reuters) – Laxman Narasimhan has no experience running coffee shops, but Reckitt, the outgoing CEO of the British Packaged Goods Group, will be briefing on changing consumer habits when Starbucks takes over.
At Reckitt (RKTL), a maker of Strepsils throat lozenges and Dettol floor cleaners, Narasimhan, 55, honed relationships with retailers ranging from Walmart (WMT.N) to Tesco for a comprehensive, but incomplete, corporate turnaround. led. (TSCO.L).
When he joins Starbucks in October, Narasimhan will have to adapt his focus to serving the millions of people who step into the coffee chain’s nearly 32,000 stores every day.
But his background, which includes a several-month stint as chief commercial officer of PepsiCo (PEP.O) in 2019, should ensure a smooth transition for Starbucks, analysts said.
“I don’t think they had a physical exposure to running direct-to-consumer businesses or retail networks,” said Credit Suisse analyst Eamon Ferry.
“He doesn’t have any direct coffee experience, so you can question that. However, he has a deeper understanding of the consumer and that’s far more important,” Ferry said.
Narasimhan is replacing interim CEO Howard Schultz, who rejoins the series for the third time since former CEO Kevin Johnson retired this spring.
Starbucks identified Narasimhan a year ago as a potential successor to Johnson as he was strategizing the coffee chain’s future and evaluating both internal and external candidates, sources familiar with the matter said.
Charles Tribet III, who co-leads the CEO and board advisory business of Russell Reynolds Associates, led the search for Johnson’s successor, the sources said.
The world’s largest coffee chain is reworking its business model from cafe to mobile pickup and delivery, while facing high costs for materials and labor.
Seattle-based Starbucks is also facing a labor union campaign, with more than 200 of its US stores unionized over the past year and workers pushing for better benefits and wages.
Narasimhan, who also spent nearly two decades at consultancy and well-known turnaround firm McKinsey & Co., will have six months to join the business before taking over as chief executive of Starbucks in April 2023.
Analysts and investors said his track record and detail show that he will use that time to study every aspect of the business.
“Narasimhan has been seen to be doing well so far,” said Jack Martin, fund manager at Reckitt shareholder Oberon Investments. He said he had “stabilized the ship” after a relatively turbulent period under his predecessor.
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rejuvenation for reinvestment
At Starbucks, Narasimhan will oversee a “reinvention” plan, which the company says includes better pay for baristas, improved employee well-being and customer experience, and re-imagining the store.
His record in Reckitt shows that he is ready to make painful decisions too soon.
Shortly after becoming Reckitt’s CEO in 2019, he launched a strategic review, promising to spend 2 billion pounds ($2.3 billion) over three years to “rejuvenate” it.
Early in the plan, Reckitt hit margins to fund new investments and refocus on hygiene, health and nutrition brands. This approach eventually proved popular among shareholders.
“Under Laxman, Reckitt has a newfound confidence — investors are confident that everything is going in the right direction,” said Bernstein analyst Bruno Montene.
“He radiates – ooze – confidence,” said Montene.
For Reckitt, Narasimhan’s exit leaves a huge hole.
For now, longtime Reckitt board member and former British American Tobacco (BAT) chief Nikandro Durante will lead Lysol surface cleaner and maker of Durex condoms.
“When Laxman made his intention clear … he thought it was best to move quickly,” said Patricia O’Hare, Reckitt’s global head of communications and government affairs. She noted that Durante operated a large company, BAT, through his own transformation.
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