Starbucks Shares Rally After Appointment of Chipotle's CEO to Top Job; Chipotle Trades Lower

By Sabela Ojea

Shares for Starbucks on Tuesday rallied in pre-market trading after the coffee chain announced that it replaced its chief executive with Chipotle Mexican Grill CEO Brian Niccol. Chipotle's stock was on the decline following the news.

Starbucks was trading 14% higher at $88.04, after seeing its stock fall 20% from the beginning of the year. Chipotle shares, in the meantime, were down 10% to $50.30, but its stock has jumped 22% on a year-to-date basis.

Starbucks's stock is getting a boost from the abrupt change in leadership as the coffee chain works to turn around its business and contend with activist investors.

Starbucks said in an interview on Tuesday that it started discussing a leadership change about two months ago. In July, the Journal reported that activist investor Elliott Investment Management had taken a stake in the company, followed by another report last week on another activist investor, Starboard Value, having also acquired an interest in the company.

Laxman Narasimhan, who joined the coffee chain less than a year and a half ago, will step down as CEO and board director immediately. Mellody Hobson, Starbucks' executive chairwoman since 2021, will become the lead independent director.

Meanwhile, Chipotle said that it named Scott Boatwright as its interim chief executive in a board reshuffle. Niccol had served as its CEO since March 2018, taking over the chairman role two years later.

Under his leadership, Chipotle sales rose to $9.9 in 2023 from $4.9 billion in 2018. Its stock price also surged from less than $7 per share when he took over the CEO role, to $55.87 as of Monday.

Write to Sabela Ojea at sabela.ojea@wsj.com; @sabelaojeaguix

(END) Dow Jones Newswires

August 13, 2024 09:33 ET (13:33 GMT)

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