Starbucks (NASDAQ:SBUX) named Reckitt Benckiser (OTCMKTS:RGBLY) CEO Laxman Narasimhan as the permanent successor to Howard Schultz. SBUX stock rose about 1.5% and added a smaller gain overnight. However, since the markets opened this morning SBUX stock has since erased most of its gains and is trending downwards.
Reckitt is a maker of health and hygiene products based in the U.K. The shares are down 15% this year but reported positive first-half results in July.
The hiring continues a trend of Indian executives being hired to run large American companies. Starbucks stock is down 27% in 2022.
Who Is Narasimhan?
Narasimhan was educated at the University of Pune and holds an MBA from the Wharton School at the University of Pennsylvania.
His most relevant experience is a stint running PepsiCo (NYSE:PEP) operations outside the U.S. That put him on the radar of Beckitt, which had bought health conglomerate Mead Johnson in 2017 and was having trouble digesting it.
It was Narasimhan’s operational success and humility that put him on the radar at Starbucks. The coffee chain has suffered execution problems and labor troubles since Howard Schultz came back to replace the retiring Kevin Johnson.
In his Reckitt resignation letter, Narasimhan expressed a desire to return to the U.S. He will join Starbucks in October and spend six months as “incoming CEO” before taking over next April. Reckitt Benckiser is worth about $46 billion. Starbucks has a market capitalization of around $98 billion.
SBUX Stock: What Happens Next?
Narasimhan is reportedly known for his people skills and international expertise. Starbucks needs both. Its largest operation outside the U.S. is in China, led by chairwoman Belinda Wong.
But the chain’s image in the U.S. has become stale. It is also under growing threat from companies like Dutch Bros (NASDAQ:BROS) in the U.S. and Luckin Coffee (OTCMKTS:LKNCY) in China, which grew fast during the Covid-19 pandemic. Narasimhan will need all his skills, marketing imagination, and perhaps the call of a siren to lure back customers.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.