Starbucks names former Reckitt head Laxman Narasimhan as new CEO

Starbucks Corp on Thursday named Laxman Narasimhan as its next chief executive officer, choosing an executive credited with revitalizing the maker of Lysol disinfectants to undertake a "reinvention" of the world's biggest coffee chain.

Narasimhan was CEO of Reckitt, which also makes Durex condoms, Enfamil baby formula and Mucinex cold syrup. He announced his departure from that post earlier in the day, and FTSE-listed Reckitt's shares fell 4 percent.

Starbucks faces a turbulent period. More than 200 of its US stores have unionized in the past year, with workers pushing for better benefits and wages at a time of surging inflation.

The company is also reworking its business model from a focus on cafes that encouraged long visits to mobile pickup and delivery while facing higher costs for ingredients and labour. Also, COVID restrictions in China have slowed the US coffee chain's business in one of its biggest overseas markets.

Narasimhan will join Starbucks in October but will take the helm in April, after spending a few months learning about the company and its "Reinvention" plan, which includes paying better wages for baristas, improving employee welfare and customer experience and re-imagining stores.

Until then, interim CEO Howard Schultz, who took back the reins of the company for the third time last April after Kevin Johnson retired, will continue to lead the company.

"He is a strategic and transformational leader with deep experience in building powerful consumer brands," Schultz said in a letter to employees welcoming Narasimhan.

Narasimhan joined Reckitt in September 2019 and he led the company through the pandemic and helped navigate a baby formula crisis in the United States.

The 55-year-old, who previously worked at PepsiCo, gained plaudits from Reckitt investors for his management style after helping revitalize the company after a sales slump.

"He took a very balanced approach to strategy. He didn't go in all guns blazing - he took a very systematic approach to get things right," said Ashish Sinha, portfolio manager at Reckitt shareholder Gabelli.

Starbucks said Narasimhan will spend the period between October and April with Schultz and the management team, spending time as a barista, meeting employees and visiting manufacturing plants and coffee farms during the transition period.

"While we are surprised Starbucks chose a successor outside the discretionary sector, we are optimistic Mr. Narasimhan's global perspectives as a CEO of a public multinational corporation and background in beverages at PepsiCo will serve Starbucks well into the next chapter," Cowen analyst Andrew Charles wrote in a note.

PepsiCo is Starbucks' ready-to-drink bottling & distribution partner for Frapuccino, cold brew and espresso beverages.

The coffee chain's shares, down nearly 27 percent this year, rose marginally to $85.70 after the bell. They have fallen 24 percent since Schultz's return as interim CEO.