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One Starbucks Star Moves On

Come March, is there going to be less glimmer in the Starbucks (Nasdaq: SBUX  ) galaxy? Well, yes -- the news broke last night. The company's president and CEO, Orin Smith, will retire at that time after having served nearly 15 years, five of which he spent as CEO. Should investors worry?

We all know that any change in management in any publicly traded company can cause some anxiety for investors. Compound this with the fact that top management at Starbucks has a pretty hefty amount of star power. (I hate to think what investors would think of a resignation of Chairman and chief visionary Howard Schultz -- that might cause a little panic in the Street.) Most of us are less acquainted with the designated new CEO, Jim Donald.

Orin Smith has definitely shown himself to be a solid CEO over the years since he took over the president and CEO spot from Schultz. As you can see from the related press announcement, under Smith's watch, the company has upped store count to 8,500 locations with $5 billion in annual total net revenues and built up a market capitalization of $18 billion. He's also sponsored Starbucks' Corporate Responsibility programs, which have made investors and customers feel even better about the company and its products.

To put it all in perspective, in 2000, investors got a case of the jitters over the idea that Smith would take over for Schultz in the first place. (Here's a blast from the past, when Fool LouAnn Lofton picked Starbucks as a Stock for Mom right as the transition was taking place.) As we all know now, that transition went swimmingly.

Sure, things could go awry under new leadership. (There's that pesky uncertainty again.) However, knowing what we know about Starbucks, it seems pretty easy to trust the management team to have a responsible and solid succession plan in place.

Shares slipped a bit in after-hours trading last night. However, investors seem to be taking it more in stride today, as well they should, with shares recently down less than 1%. It's too bad that come March, we at the Fool won't be playing Buy, Sell, or Hold with Orin Smith anymore. Despite the bittersweet sadness of saying goodbye to an individual who has proven a strong leader, it seems a good bet that Starbucks will continue on its course.

Pull up a spot on the Starbucks discussion board.

Alyce Lomax does not own shares of any of the companies mentioned.

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10/21/2016 4:00 PM
SBUX $53.63 Up +0.04 +0.07%
Starbucks CAPS Rating: ****