Starbucks names new CEO Laxman Narasimhan

Starbucks Corp.

SBUX 1.58%

He named consumer products executive Laxman Narasimhan as its new CEO, months after former chief Howard Schultz stepped in to steer the coffee giant through rising costs, a union push and overseas challenges.

Mr. Narasimhan, 55, on Thursday announced that he will step down from Reckitt Benckiser Group PLC on September 30. Mr. Narasimhan has for the past three years served as chief executive of U.K.-based Reckitt, maker of Lysol and Enfamil baby formula, and the Wall Street Journal reported that he was in final negotiations to take a senior role at a U.S. company.

Prior to leading Reckitt, Mr. Narasimhan held various leadership roles at PepsiCo Inc.

Starbucks and PepsiCo have a long-standing relationship through the chain’s ready-to-drink coffee, including a deal struck when Mr. Narasimhan was CEO of PepsiCo Latin America.

Starbucks said in March that then-CEO Kevin Johnson, who led the company for five years, would retire and Mr. Schultz, who had turned the Seattle-based coffee chain into a global brand, would take over on an interim basis since April. Mr. Schultz has since said the company has made mistakes in recent years and needs to change, from how baristas are paid to the blenders in its coffee shops.

“We truly believe we have found an exceptional person to be our next CEO. He is a proven leader,” Starbucks board chairwoman Mellody Hobson said in an interview Thursday.

Mr. Narasimhan will relocate from London to the Seattle area and join Starbucks as its new CEO on Oct. 1, the company said.

Ms. Hobson said that Starbucks’ board had asked Mr. Schultz to stay on as interim CEO until April 2023 to help Mr. Narasimhan familiarize himself with the company and its culture. Mr. Narasimhan will assume the role of CEO and join the company’s board on April 1.

Mr. Schultz will remain a member of the Starbucks board after stepping down as interim CEO. While Mr. Schultz will continue to play a unique role at the company, Mr. Narasimhan will be independent, Ms. Hobson said.

“He certainly has a special voice, a deep knowledge of the business in ways that none of us have, and we want that,” Ms. Hobson said of Mr. Schultz. “We want him in the room.”

Mr. Narasimhan will take over the world’s largest coffee chain by number of locations and sales as he navigates a changed business landscape. Covid-19 hit Starbucks hard, forcing them to temporarily close stores. By 2021, backlogs had helped sales recover to pre-pandemic levels, but this year, rising costs have eroded Starbucks’ margins and the company has raised prices.

The company is also fighting a unionization effort that began in its Buffalo, New York, market a year ago, with workers pushing for better pay, staffing levels and hours. Employee turnover has soared since the pandemic hit, and the company raised wages in August.

“While I did not plan to return to Starbucks, I know that the company must once again transform itself to meet a new and exciting future where all of our stakeholders will mutually flourish,” Mr. Schultz said in March.

Write to Heather Haddon at heather.haddon@wsj.com and Emily Glazer at emily.glazer@wsj.com

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