Despite a strong start to the year for stock markets, investors in Starbucks (NASDAQ:SBUX) have been left bitterly disappointed with its shares down by approximately 20% at the time of this writing.
After the earnings miss, Laxman Narasimhan, the new CEO of Starbucks, appeared on Jim Cramer’s Mad Money to try and explain both the results and the company’s path forward.
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Much of the discussion focused on whether Starbucks’s premium coffee is overpriced, with Jim Cramer asking early in the interview if the coffee might be “just too darn expensive.” In response, Mr. Narasimhan admitted, “we have not been able to communicate to [the occasional customer] the value we provide,” while stressing that its core customers still were seeing value.
Some commenters couldn’t help but note the irony of Starbucks’ expensive coffee providing any value, saying “Mocha went from $4.75 by my house to $6.25 in 24 months. Was already overpriced before the price hike. That’s why your quarter sucked.”
Meanwhile, others commended Jim Cramer for the intensity of the interview, with one YouTube user saying “Wow Cramer actually grilled an executive.”
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Of course, Jim Cramer might have displayed extra frustration given he owns Starbucks stock. Despite Cramer’s disappointment that management did not warn investors of the deteriorating performance of the company’s financials when compared to their prior earnings guidance, he still plans to hold the stock for now.
While Mr. Narasimhan has only been CEO for a little over a year, he’s struggled to escape the shadow of his very successful predecessor, Howard Schultz, who was CEO of Starbucks over three separate periods and continues to remain the largest shareholder.
In a LinkedIn post published by Mr. Schultz, he identified areas where the company should be making improvements, specifically saying that “the company’s fix needs to begin at home: U.S. operations are the primary reason for the company’s fall from grace,” and that “the stores require a maniacal focus on the customer experience, through the eyes of a merchant. The answer does not lie in data but in the stores.”
Not only was Jim Cramer “stunned” by the bad quarter, he was also surprised by the level of candor from the company’s former CEO, saying it was unlike anything he had ever seen before.
Whether Howard Schultz feels the need to have his fourth stint as Starbucks’ CEO remains to be seen. Shareholders, including Jim Cramer, are losing patience and are anxiously awaiting to see if Starbucks’s turnaround plans bear fruit.
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This article Jim Cramer Destroys New Starbucks CEO In Heated Interview, Says He Was “Stunned” As Its Former CEO Admits a “Fall From Grace” originally appeared on Benzinga.com
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