NEW YORK, Nov 3 (Reuters) – New CEO Laxman Narasimhan took the stage at Starbucks Corp’s (SBUX.O) Seattle headquarters in September, telling investors he would maintain the company’s mission.
But the 10-year veteran of the consumer business did not say what steps he would take to deal with a growing labor movement, or help the coffeehouse chain meet ambitious sales targets as it overhauls its cafes .
Narasimhan, former CEO of British Lysol maker Reckitt, joined Starbucks’ payroll on October 1. He recently visited Starbucks cafes in London, Seattle and Long Island in New York, where he began training as a barista, according to LinkedIn posts. He also attended a conference for more than 2,000 Starbucks district managers, according to a company blog post.
Starbucks shares have been roughly flat at $84.58 since Sept. 1, when Starbucks announced Narasimhan’s appointment. Investors who spoke to Reuters ahead of his quarterly results on Thursday said they hoped to hear details about his approach to the union and overall business goals, although he is not expected to speak. He takes over as CEO on April 1.
Last month, Starbucks said it was aiming to generate 7% to 9% sales growth globally through 2025, despite intense competition from rivals including Dutch Brothers. (BROS.N) and McDonald’s Corp. (MCD.N).
Employees at at least 250 locations owned by US companies voted to unionize last year after campaigning for better working conditions. Outgoing chief executive Howard Schultz responded by calling unions “third parties” and saying the company was “in a battle for the hearts and minds of our employees.”
Jake Dollarhide, co-founder of Longbow Asset Management, told Reuters he was not bothered by tensions around the union. “I want [Narasimhan] to maximize shareholder value,” he said.
Dollarhide, some of whose clients own Starbucks stock, wants to see Narasimhan expand Starbucks’ canned and bottled beverage business, pushing products such as $3.38 Nitro cold brew and $2.98 Tripleshot Energy. $ deeper into retailers, including Kroger Co. (KR.N). In 2015 at PepsiCo Inc. (PEP.O)Narasimhan championed a deal for PepsiCo to distribute Starbucks ready-to-drink beverages in Latin America.
Four investors whose funds embrace social causes told Reuters they hoped Narasimhan would bring a softer stance to talks with the union. This, they said, could help improve employee retention at a time when Starbucks is restructuring its cafes and needs to keep operations running smoothly.
“It would mean a lot if one of the first things he said was, ‘I went and talked to the workers in our stores, I heard their concerns about safety, wages, health care,’ said Christian Greiner, sub-advisor to Azzad Asset Management’s large-cap growth fund, which has a $2 million stake in the company.
Starbucks did not respond to a request for comment. The company previously said it was listening and investing heavily in its employees, including spending on new equipment to make coffee faster and raising the average minimum wage to nearly $17 an hour.
He also said he respects the choice of workers to join a union and is committed to bargaining in good faith.
There is little in Narasimhan’s track record or in his public remarks offering any clues as to how he will handle workers’ grievances. In negotiations, which began last week at dozens of stores, baristas plan to seek lower health insurance costs, reliable work schedules and more transparency before employees are laid off, employees say. involved in the talks.
When Narasimhan led PepsiCo in Latin America from 2015 to 2019, workers at a Guatemalan Frito Lay plant formed an independent union, with nearly 900 of its 1,300 employees, according to union officials in Guatemala, a relatively small market for the company. PepsiCo initially did not recognize this union, but signed a three-year deal with it in 2018.
Starbucks’ board first scouted Narasimhan as a potential successor to former CEO Kevin Johnson before Johnson retired in March – and before workers sought union recognition, two sources familiar with the company told Reuters. case.
Jonas Kron, director of advocacy at Trillium Asset Management, which owns about $48 million in Starbucks stock, said Narasimhan had “wiggle room where Schultz had none” because he “didn’t not tie his own personal identity or professional reputation to this hostility to unions as Schultz did.”
Currently, Schultz’s position is “dividing the workforce,” said Dieter Waizenegger, executive director of SOC Investment Group, which works with union pension plans that own about $156.6 million in Starbucks stock.
Kron and three other investors filed a shareholder proposal last month asking Starbucks’ board to hire an independent third party to assess its compliance with labor standards in its 2020 Global Human Rights Statement.
Reporting by Hilary Russ and Jessica DiNapoli in New York; additional reporting by Daina Beth Solomon in Mexico City; Editing by Vanessa O’Connell and Aurora Ellis
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