STORY: Starbucks shares surged as much as 24% in Tuesday morning trading and were on track for their best day ever after announcing Chipotle Mexican Grill head Brian Niccol will become its new CEO.
The stock jump erased all of Starbucks' 2024 losses.
Niccol, who's been at Chipotle since 2018, is heralded for reviving the burrito chain, where annual sales have surged and the stock has more than tripled over the last five years.
He replaces Laxman Narasimhan, whose tenure only lasted a year-and-a-half after he was originally brought in to engineer a "reinvention" of the world's biggest coffee chain.
But Starbucks’ stock continued to falter, losing nearly one-quarter of its value.
It has been under pressure from activist investor Elliott Investment Management to improve its business, and has suffered from increased competition and weakening demand in the United States and China.
Elliott on Tuesday said that Niccol's appointment was "a transformational step forward".
And one analyst told Reuters the move was a “significant victory for Starbucks”, as Niccol “will be given the much-needed leeway to make investments and time to turn around” the company.
Starbucks recently tweaked its business model to focus on mobile pickup and delivery orders rather than cafes set up for long visits.
In April, it cut its annual sales forecast after reporting a fall in same-store sales for the first time in nearly three years.
Meanwhile, Niccol’s pending departure from Chipotle is hurting that stock, which dropped at much as 14% in Tuesday morning trading.
