Three of the more iconic brands in all of retailing had big changes last week – two involving new CEOs – as retail companies try to figure out how to fix their problems in what remains a troubling sector.
Two out of three of these retailers might have made smart moves: the third maybe not so much.
Let’s take Starbucks first. In a sudden and rather dramatic move, the latte-meisters fired their president of less than two years and replaced him with the guy who has been running Chipotle’s for the past six years, Brian Niccol. Starbucks has been struggling over the past few years, with assorted management changes (long-time leader Howard Schultz adding to the turmoil), union problems, pricing pushback, employee dissatisfaction and most of customer dissatisfaction over long waits to get caffeinated.
It’s a big checklist for Niccol who seems to have done a pretty good job at Chipotle, which was having its own food safety and customer issues when he got there. He’s led a dramatic upturn in business but according to reports, it’s come with some serious stock buybacks and a big paycheck for himself.
He’ll get an even bigger one at Starbucks — $100 million a year is what we read – and we wonder how that will go over if he’s forced to cut staff and dial back pay increases at Starbucks to get their finances into better shape. He seems like the right person for this job, just at a price that we wish was more acceptable.
Victoria’s Secret is another retailer that once flew high but more recently has crashed as its sexification strategy has proven the wrong one for the times. They named Hillary Super – is that not the best name for a retail superstar? — as CEO, coming over from the Rhianna brand Fenty. That got all the headlines but Super’s career is much more substantial, she ran Anthropologie and has a long list of retail brands on her resume.
Like Niccol, she has her work cut out for herself. VC needs to find a new reason to exist and it needs to do so with a store fleet heavily situated in a lot of B and C shopping malls. At least her paycheck seems to be more reasonable.
Then there’s Nike, yet another brand that was a superstar but has hit the wall over the past few years with an ill-conceived strategy to cut out a lot of its third party distribution while competitors in the footwear and fashion business were getting their acts together.
Last week, private equity investor Bill Ackman announced he had bought a couple of million Nike shares through his Pershing Square company to the tune of about $330 million. One investor was quoted in a news report saying something to the effect “this is just that Nike needs now that Ackman is involved.”
Wrong. While Ackman has had some investment successes, let’s never forget how his meddling in JCPenney 15 years ago caused the company to lose 25% of its business in 18 months, eventually have to file for bankruptcy and all these years later still struggle to make itself right again. If he tries the same thing at Nike it won’t end well. Bill Ackman is the last thing Nike needs.
Retail roulette is a dangerous game. Sometimes you win…and sometimes you shoot yourself right between the eyes.
WarrensReport 