Jim Cramer criticized Starbucks CEO Laxman Narasimhan in a CNBC interview following the coffee giant’s poor quarterly performance and guidance miss, which resulted in a more than 15% drop in the company’s shares. During the interview, Narasimhan defended Starbucks’ performance, stating that they have an action plan in place to address the challenges they are facing. He highlighted upcoming products and a strong foundation for the business. However, Jim expressed disbelief and distress at the situation, emphasizing the importance of trust and questioning the CEO’s portrayal of the company’s strengths to turn things around. Narasimhan attributed the bad quarter to issues in China and bad weather in the U.S, outlining an action plan to attract more occasional customers to Starbucks.
Despite Narasimhan’s assurances, Jim continued to challenge the CEO on various aspects of Starbucks’ performance, particularly questioning the company’s expansion plans in light of disappointing results. Narasimhan pointed to growth in markets such as Latin America and Japan, as well as maintaining market share in the U.S. However, Jim cited information from competitors like Tim Horton’s and Dunkin’ Donuts that suggested otherwise. Narasimhan acknowledged some challenges, such as declining loyalty program users and long wait times for transactions, but expressed optimism about improvements in these areas. Following the interview, Cramer reflected on his initial impressions of Narasimhan’s potential as CEO and expressed doubts about his ability to navigate the current challenges facing Starbucks.
The CNBC Investing Club downgraded its rating on Starbucks and reduced the price target to $90 per share in response to the disappointing earnings report. Director of Portfolio Analysis Jeff Marks had previously warned of a potential miss in Starbucks’ earnings and noted similarities to a previous quarter where the market was anticipating the negative outcome. Despite this, the stock did not drop significantly after the previous miss, but the recent quarterly performance prompted a downgraded rating from the club. Jim’s Charitable Trust, which is used for the CNBC Investing Club’s portfolio, holds shares of Starbucks. CNBC reached out to Starbucks for comment on the interview, but there was no immediate response from the company.
In conclusion, Jim Cramer’s criticism of Starbucks CEO Laxman Narasimhan’s handling of the company’s poor quarterly performance led to a contentious interview on CNBC. Narasimhan defended Starbucks’ actions and plans to address challenges, but Jim expressed doubts about the CEO’s ability to turn things around. The CNBC Investing Club downgraded its rating on Starbucks and adjusted the price target in response to the disappointing earnings report. Despite the challenges facing Starbucks, Narasimhan remains optimistic about the company’s growth potential and future prospects.
