Starbucks Shuffles Executive Team; CEO Schultz to Focus on Digital, Mobile

Starbucks CEO Howard Schultz

Starbucks yesterday announced significant changes to its executive leadership team, including an expanded role for CEO Howard Schultz in the company’s “next generation retailing and payments initiatives,” according to a statement. Schultz plans to work more closely with Starbucks chief digital officer Adam Brotman and chief strategy officer Matt Ryan, while CFO Troy Alstead has been promoted to chief operating officer, a newly created role in which he will be responsible for the day-to-day operations of the company.

The new organizational structure comes amid a shifting retail landscape in which consumers are spending less time in malls — where many Starbucks stores are located — and instead choosing to shop online. The changing retail climate was evident during the recent holiday season in which Starbucks pointed to a “seismic” shift to online shopping, according to the Associated Press.

“These organizational moves map our internal talent to the rapidly evolving retail environment and significant strategic and market opportunities ahead of us,” Schultz said in the statement.

Starbucks also announced that Scott Maw, the company’s senior vice president of Corporate Finance, has been appointed to executive vice president and chief financial officer. Additionally, Craig Russell, Starbucks voice and advocate for coffee, will be promoted to executive vice president, Global Coffee. While Maw will report to Alsted, Russell, who joined Starbucks in 2001 as its vice president of retail operations for Seattle’s Best Coffee, will continue to report to Schultz.

While Starbucks deflected speculation that the changes were part of a broader succession plan, Wells Fargo Securities analyst Bonnie Herzog praised the elevation of Alstead, a 22 year veteran of the company. Herzog views the move as one that will allow Schultz “to more greatly focus on leveraging [Starbucks’] mobile and digital assets and loyalty and e-commerce platforms.”

“[Starbucks] has built unparalleled digital payment and mobile platforms which it believes are significantly underleveraged,” Herzog said. “Management believes it can now take advantage of the investments made in these areas, which were said to have garnered the attention of leading tech companies, and use and grow these digital/mobile platforms.”

Herzog noted that the new organizational structure “should benefit [Starbucks] own core business and enable it to leverage these assets outside the ‘Starbucks eco-system,’ perhaps becoming the leading standard for retail mobile payments.”

“In our view, this positions Starbucks for its next wave of global growth and sets the stage for possibly leveraging these capabilities outside of the Starbucks enterprise,” Herzog said, noting that the company is “positioning itself for even greater financial and operational discipline around the world and that it is on the cusp of the ‘next great inflection point’ in its journey.”