By Richa Naidu
LONDON (Reuters) – Laxman Narasimhan may have no experience of running coffee shops, but the outgoing CEO of British packaged goods group Reckitt will bring insight into the changing habits of consumers when he takes over at Starbucks.
At Reckitt, maker of Strepsils throat lozenges and Dettol floor cleaner, Narasimhan spearheaded a sweeping, but unfinished, corporate turnaround, while honing relationships with retailers ranging from Walmart to Tesco.
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 roughly 32,000 stores every day.
But his background, including a stint of several months as PepsiCo’s chief commercial officer in 2019, should ensure a smooth transition to Starbucks, analysts said.
“I don’t think he’s had material exposure to direct-to-consumer businesses or in running retail networks,” Credit Suisse analyst Eamonn Ferry said.
“He has no direct experience in coffee, so you could question that, however he does hold a deep understanding of the consumer and this is far more important,” Ferry added.
The world’s biggest coffee chain is reworking its business model from a focus on cafes to mobile pickup and delivery, while facing higher costs for ingredients and labour.
Seattle-based Starbucks also faces turbulence, with more than 200 of its U.S. stores having unionized in the past year and staff pushing for improved benefits and wages.
Narasimhan will have six months after joining to get to grips with the business before taking the helm as chief executive of Starbucks in April 2023.
His track record and eye for detail suggests he will use that time to study every facet of the business, analysts said.
Soon after becoming Reckitt CEO in 2019, Narasimhan commissioned a strategic review, vowing to spend 2 billion pounds ($2.3 billion) over three years to “rejuvenate” it.
“Narasimhan was seen to have been doing a good job thus far,” Jack Martin, fund manager at Reckitt shareholder Oberon Investments, said, adding that he had “steadied the ship” following a relatively turbulent period under his predecessor.
Reckitt early in the turnaround took a hit to adjusted margins to fund new investments, and aligned its brands around hygiene, health and nutrition, an approach which proved popular with shareholders.
“Under Laxman, Reckitt has a newfound confidence – investors seem to be convinced that everything is going in the right direction,” Bernstein analyst Bruno Monteyne said.
“He radiates – oozes – confidence,” Monteyne added.
($1 = 0.8654 pounds)
(Reporting by Richa Naidu; Editing by Matt Scuffham, Alexander Smith and Nick Zieminski)
