Nike and Starbucks rely on new CEOs after turbulent years (Photo: Freepik, Althaff29)
Warren Buffett once said that there are a number of companies that could be led by less talented managers themselves because they are almost unstoppable due to their strong market position. Nevertheless, he prefers to invest in companies that are led by strong managers. Because management plays a crucial role in the long -term success of a company.
In recent years, some popular and so -called “strong brands” such as Nike and Starbucks have become under increasing pressure. The competition caught up and customers found alternatives. In order to achieve a turnaround and the recapture of market shares, Nike and Starbucks exchanged their CEOs. Can these companies start again under a new tour? Will you manage to regain market shares and strengthen the brand again?
Nike – leads the long -term expertise to the turnaround?
The Nike Inc. Has struggled with a number of problems in recent years that were caused by strategic wrong decisions, external events such as Corona pandemic and internal management problems.
The departure of CEO Mark Parker at the turn of the millennium was a bitter loss for the company. Parker led Nike for 14 years at a time of expansion, brand formation and digitization. 2020 John Donahoe took over the leadership of Nike. He increasingly rely on direct sales and digitization.
This resulted in Nike has increasingly lost market shares in competitors. The sales and margins stagnate and the margins were increasingly under pressure through too high stocks-including from corona pandemic. The discount battle affected the image of the “Premium” brand.
After only 4 years in office of Donahoe, the Nike-Veteran Elliot Hill succeeded as CEO in autumn 2024. Hill, who shaped the image of Nike and the Nike brand Jordan for years, is considered the appropriate successor for this challenging time at the internal management level. Hill would like to eliminate 3 major problems: the too strong discount policy, the declining focus on the sports area and the DTC strategy (direct-to-consumer), which contained relationships with the wholesale.
If Hill successfully mastered these challenges with Nike, the company could regain the trust of investors. But the path still looks rocky.
Starbucks-with chipotle CEO for turnaround?
Not only Nike had difficult years. The success brand Starbucks went through a roller coaster at the management level. After the founder Howard Schultz, Laxman Narasimhan took over the CEO office. This step was supposed to herald a new era for Starbucks, but under Narasimhan there were a number of strategic wrong decisions that significantly burdened business development and the share price.
The missed opportunities on the Chinese market and the incorrect price strategy in times of high inflation and more scarce budgets are particularly negative. Many customers were looking for alternatives. Even Schultz expressed sharp criticism of the leadership under Narasimhan. Starbucks had lost the focus on the correct values.
After 18 months in office, Narasimhan was recalled as CEO. The share price reacted friendly and the bang effect was guaranteed when the successful chief of Chipotle, Brian Niccol, was appointed when CEO. Niccol, who made chipotle one of the most successful and popular restaurant brands, assumed the challenge of bringing Starbucks back forward.
A remarkable turn can already be seen after just a few months. Niccol has a clear vision. He relied on a simplification of the menu, reduced discounts and once again steered the focus on the brand. Starbucks stands for high -quality coffee products and an excellent customer experience. These changes contributed to the fact that Starbucks was able to beat both sales and profit expectations in the first quarter report and the return to the brand identity by 2030 provides for profit growth of 20 percent annually.
Of course there are still some risks and challenges for Starbucks. Especially with regard to raw material prices and increasing competitive pressure. But overall, the CEO change already makes a positive impression. The share price also seems to initiate a turn for the positive.
Disclaimer:
No investment advice. No call to buy or sell securities.