Starbucks' New CFO Agrees It's In A Bad Place Right Now, But She Plans To Change That – CoffeeTalk

Cathy Smith, former finance chief at major companies like Nordstrom, Bright Health, and Target, is now Starbucks’ new CFO. She will be making her public debut as CFO on Starbucks’ next quarterly earnings call on Tuesday. Smith arrives at Starbucks looking to shake off a long slump, with four straight quarters of same-store sales declines and perhaps more worryingly in the long term, a much weaker hold on customers. Niccol, who has been busy since his appointment last summer trying to reinvigorate a brand whose bloated menu, often chaotic in-store service, and frequent forays in the culture wars have cost it customers.

Niccol has made early moves, big and small, to begin righting Starbucks. He has simplified the menu, eliminated some 30% of items such as doughnuts and some Frappuccinos, to rein in what he has called Starbucks’ “overly complex” offerings and speed up service. Smith said not to worry, that a key prong to Starbucks’ comeback will be a more compelling food offering. He has also cut 1,100 corporate jobs and is looking to improve Starbucks’ mobile ordering system in the next year to avoid pileups behind the counter and delays in items being ready for customers.

His goal is to make Starbucks a “welcoming coffeehouse, where people gather and we serve the finest coffee handcrafted by our skilled baristas,” as he recently told Wall Street analysts. Some of the moves to achieve that don’t involve much money, such as the new practice of having a barista leave a handwritten message on a cup for a customer or a new dress code. Many other changes he is eyeing do imply potentially large cash outlays. Those include expanded seating, more power outlets so people can stay longer and work, new risers and specific shelves for mobile order pickup, and store renovations.

Smith, an avid scuba diver who once told Chain Store Age that she has competed in several national skydiving events, insists on any risk being calculated. She holds an MBA from the University of Southern California, brings to Starbucks the skill of knowing how to talk to Wall Street when a company needs to say something investors might not want to hear. At its annual meeting with the financial community in 2017, as Target struggled to get out of a long funk, CEO Brian Cornell announced a $7 billion, multiyear plan to improve e-commerce and refresh what he then called its all-too-often “old and tired stores.” Investors were having none of it, sending shares plummeting on their worst day since 1998. The Target strategy ultimately worked, and Smith, with her credibility, was able to walk Wall Street analysts through the murkiest times of that multiyear turnaround.

Smith says that consistency in showing improvements will be the way to win back Wall Street’s confidence: “One data point does not make a trend. We’ll start to string together two quarters of strong results, then three quarters, and by the time we get to the fifth quarter, Wall Street will say, ‘Okay, I believe you,’ and we’ll start to see a different outcome in our stock.” Starbucks shares are down 34% from their all-time high in 2021.

In her initial weeks on the job, Smith has been learning the inner workings of Starbucks by visiting a roasting plant near Seattle, the company’s headquarters, as well as a distribution center, and eventually don a green apron to serve customers in an actual store to get a bit of frontline experience.

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