Starbucks makes a change at the top
This just in: Laxman Narasimhan is out as the C.E.O. of Starbucks, the company announced on Tuesday, a year and a half since he succeeded Howard Schultz at the coffee chain.
Narasimhan will be replaced by Brian Niccol, a fast-food industry veteran who executed a turnaround as C.E.O. of Chipotle. The 50-year-old executive will also assume the role of chairman at Starbucks.
Starbucks shares have fallen more than 20 percent since Narasimhan took the reins, hurt by slowing sales in the U.S. and China. Narasimhan has also been rocked by dueling activist investor campaigns and has had to fend off criticism from Schultz. It’s the company’s third leadership change in the past 18 months. Starbucks’ stock jumped more than 14 percent in premarket trading after the announcement; Chipotle was down about 9 percent.
Other changes: Mellody Hobson, who was instrumental in the hiring of Narasimhan, will stay on the board as lead independent director, but cede her role as chairwoman. Rachel Ruggeri, the Starbucks chief financial officer, will serve as interim C.E.O. until Niccol starts in mid-September.
Schultz, the retired three-time C.E.O. who was consulted on the hiring of Niccol, will remain chairman emeritus but he will not have an additional role at the company.
“Having followed Brian’s leadership and transformation journey at Chipotle, I’ve long admired his leadership impact,” Schultz said in a statement. “His retail excellence and track record in delivering extraordinary shareholder value recognizes the critical human element it takes to lead a culture and values driven enterprise.
“I believe he is the leader Starbucks needs at a pivotal moment in its history. He has my respect and full support.”
The struggles at Starbucks have attracted the attention of Elliott Management and Starboard Value. The hedge funds have purchased big stakes in the company and had been pushing for changes, including getting board seats.
Narasimhan and the Starbucks board met with Elliott last week, CNBC reported, to discuss a settlement and possibly getting Jesse Cohn, an Elliott managing partner, named a director. Schultz had privately said he was opposed to the settlement.
Neither hedge fund was informed about the management shake-up and it remains unclear whether they will continue to pressure the company.
What’s next at Chipotle? Scott Boatwright, chief operating officer, will step in as interim C.E.O. The company’s stock has been one of the best performers on the S&P 500, having gained more than 50 percent in the past year as one of the few fast-food companies to show strong growth despite a challenging environment for consumers.
HERE’S WHAT’S HAPPENING
Huawei is said to be close to releasing a new chip for artificial intelligence. The Chinese tech company has told customers that it could start shipping the semiconductor in the fall, according to The Wall Street Journal. Such a move would mean Huawei had overcome U.S. sanctions designed to slow access to the most advanced technologies and could allow the company to challenge Nvidia’s dominance in the sector.
The F.B.I. is investigating attempted hacks of presidential campaigns. The agency said it had opened its inquiry after Donald Trump said Iran had targeted his campaign. The F.B.I. did not specifically mention the allegations, but it is also looking into an effort to access the Democratic presidential campaign’s computer system, according to a law enforcement official with knowledge of the plans.
General Motors is reportedly cutting back in China. The company is said to be laying off staff as part of a wider strategic overhaul in the world’s biggest car market, according to Bloomberg. GM would be the latest big Western brand to rethink its approach in China over growing worries about increased competition from local brands.
The Trump-Musk bromance
Hoping to reclaim the news agenda from his rival, Vice President Kamala Harris, Donald Trump headed to X for a much-hyped live conversation with Elon Musk.
The event revealed little about Trump’s policies, but it did give an insight into the growing ties between the men — and what Musk might be hoping for if Trump wins in November.
The pair talked for two hours after glitches delayed the conversation. The Trump campaign used the occasion to post a series of messages on X in the lead-up to a conversation that X said attracted more than a million listeners. Still, Trump saved his most incendiary messages for Truth Social, the platform he helped found.
Much of the talk echoed Trump campaign talking points, like targeting inflation and the Biden administration’s immigration policies. The pair also found more common ground on government spending.
Musk proposed creating an efficiency commission and suggested he could run it. “Well, you’re the greatest cutter,” Trump responded, a possible reference to a wave of cost cuts and firings that Musk has implemented at X and Tesla over the past two years. (The Wall Street Journal had previously indicated Musk was interested in such a role.)
Musk pushed for more investment in infrastructure. His companies, including SpaceX, have big government contracts and he extolled the possibility of doing more to achieve his ambitions. “We could build a base on the moon,” he said. “We can send American astronauts to Mars. We could build high speed connections that are more advanced than anything else in the world.”
Trump praised Tesla, but added a skeptical note about electric vehicles. “You make a great product, Elon, I have to be honest with you,” he said. “But that doesn’t mean that everyone should drive an E.V.”
On climate change, there was more push and pull. Musk consistently promoted sustainable energy and Trump made the case that fossil fuels were key, even in making E.V.s. Musk, who quit Trump’s advisory committee in 2017 after the then-president pulled the U.S. out of the Paris climate accords, was more measured. “On balance it’s better to move faster than slower,” Musk said, but “without vilifying the oil and gas industry.”
The call was another sign of Musk’s rightward shift. Musk explained his endorsement of Trump in the context of his past political views. He voted for Barack Obama, he said, but Biden pushed him away. “A lot of people thought the Biden administration would be a moderate administration, but it’s not,” he said. “And obviously that we’re just going to see an even further-left administration with Kamala.”
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In other news: Elon Musk sparred with a senior European Union official after being warned that spreading disinformation on X could violate European law.
Inflation watch
Global stocks and U.S. futures have ticked higher on Tuesday as the markets drift into an August lull.
But pivotal data releases and corporate earnings, beginning today, could test the calm as hard-landing worries persist.
Inflation is the big focus for investors. New data will come out this week, starting with Tuesday’s Producer Price Index report at 8:30 Eastern. That will be followed by the Consumer Price Index report tomorrow and retail sales data on Thursday, all of which should shed light on household spending and whether inflationary pressures are in check.
Inflation has cooled in recent months, and markets have priced in an interest-rate cut at the Fed’s meeting next month. But such a move is not a done deal because a number of Fed officials have said they want to see further evidence that inflation is in retreat before lowering borrowing costs.
Could tomorrow’s C.P.I. settle the debate? Here’s what to watch:
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Analysts are forecasting an uptick in inflation. The July C.P.I. reading is expected to show a 0.2 percent rise on a monthly basis, after falling 0.1 percent in June.
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Core inflation, which strips out food and fuel prices, is expected to have risen 0.2 percent month-on-month, and 3.2 percent higher than July last year.
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Watch shelter inflation, which has an outsize weighting in the C.P.I. report. It has been a wildcard for months, but cooled slightly in June. More progress there could convince Fed officials that it’s time to cut rates, analysts say.
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A surprise higher or lower could trigger a big move higher in stocks, Wall Street analysts say. Last month’s tepid C.P.I. report helped send the S&P 500 to a new high, only to see the benchmark fall on growth concerns.
An encouraging sign for inflation hawks: Oil prices fell overnight, after a multiday gain. Slowing global demand appears to have offset fears of an imminent attack by Iran and its proxy forces on Israel that could widen the conflict in the Middle East.
The markets also got a welcome report on inflation on Monday. A growing number of consumers may be pulling back on spending, but some households see the inflation problem easing. The New York Fed’s closely watched monthly survey of consumers showed that respondents’ three-year outlook on inflation has improved to a new low.
Earnings should give another clue about the economy. On Tuesday, Home Depot issued a weak sales outlook, saying that consumers were still struggling with inflation and higher interest rates. It’s another bad sign for the housing and home-repairs market. On Thursday, investors will hear from the retailing giant Walmart, a bellwether on consumer spending.
THE SPEED READ
Deals
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Janus Henderson Group has agreed to buy Victory Park Capital, furthering its push into private credit markets. (Bloomberg)
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“Universal Music Signs Meta Deal Allowing Its Music to Appear on WhatsApp” (WSJ)
Elections, politics and policy
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The N.F.L. is said to be meeting with private equity groups this week, the next step in the league’s efforts to bring institutional money into its ownership ranks. (Sportico)
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“The New York Times Will Stop Endorsing Candidates in New York Races” (NYT)
Best of the rest
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What can Sweden’s tech success teach the rest of Europe about how to compete? (NYT)
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“The Billionaire Suing Facebook to Remove His Face From AI Scams” (WSJ)
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The post Starbucks Replaces Chief Executive After Activist Investor Campaigns appeared first on New York Times.
