Starbucks Shakeup, Tamer Inflation Data, Interview with Blackstone Pres. Jon Gray 8/13/24

David Faber (0:00)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:05)

Good tuesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. futures holding some gains here on a robust news day, whether that's Starbucks, Home Depot, lots of geopolitics, PPI runs light, 10-year yield drops to about a one-week low. Our roadmap begins with breaking news at Starbucks. The company replaces CEO Laxman Narasimhan with the Chipotle's chief Brian Niccol. We got all the details.

David Faber (0:29)

Plus, PPI comes in cooler than expected. That does give stocks a bit of a bump ahead of the open. And we continue to see signs of a cautious consumer. Home Depot saying it expressed comp store sales to decline as customers, quote, sense of greater uncertainty in the economy.

Carl Quintanilla (0:48)

Let's begin with this news out of Starbucks. Laxman Narasimhan is out as CEO, effective immediately and amid the company struggles as well as activist investors pushing for change. It is Chipotle's chief, Brian Niccol will become chairman, CEO of the Coffee Chain beginning in September. CFO Rachel Ruggeria will serve as interim CEO until he gets there. Melody Hobson will become lead independent director. Jim, this is a story that you know well and have some involvement in to some degree.

Jim Cramer (1:15)

Well, first, this doesn't happen in corporate America. You don't have a guy, I just had Brian on, who's outstanding and did an amazing job. Look, I mean, the numbers speak for themselves. 773% says he got to Chipotle. And he's remarkable. You very rarely see this. Jack Hart told the CFOs, he said, listen, it's terrific. Now, Jack's staying on. That's important. But I mean, people at Starbucks, you know what he said, he's the best Starbucks lucky to have him. What I would point out is that Howard Schultz really wanted this. And I think, David Faber, I think that that is part of the narrative.

David Faber (1:53)

Yeah. Listen, Mr. Schultz, of course, it continues to be a force within Starbucks. Really only as what is a technically a large shareholder. Of course, he's not on the board. He has no management role of any kind. And yet he was certainly an important figure here. In part, it seems in, if I could say turning on Laxman and or at least not giving him continued support some time back, which obviously put his job, it would seem, and clearly was in some jeopardy. And moving forward and perhaps helping, I mean, the board obviously, my understanding with the Brian Niccol thing is that they reached out some time back.

They really thought they didn't have a real shot at getting him. And then as Melody Hobson indicated in the interview that she gave on Squawk Box, things really happened pretty quickly. But as you might imagine, there had been some conversation at least about it. But my understanding is they thought, well, what shot do we have? To your point, I mean, because Brian's the best.

Jim Cramer (2:56)

Okay, so Howard just sends me, this is a great day for Starbucks. Brian is one of one. I like that. No one better to rejuvenate the company and the Starbucks brand than him. Our partners will embrace him. The market's reaction is consistent with the concerns that I had. And this is the solution I had hoped for. I've known Brian and followed the transformation led at Chipotle with great respect. He has been full support. And I would say obviously thank you. yes, of course, one of one. That's my opinion, respect for Brian and what he will mean for Starbucks and shareholder value. Look, this guy's a dream come true. Okay. I mean, he came in at Chipotle with Chipotle. I don't know if you remember, was in disarray. Yeah. And he fixed the organization. Well, that's what Starbucks needs. And then Carl, the esprit, hire within, promote within, respect for the workers, which Howard Schultz had always favored and done a great job with.

I come back and I just say this stock this morning, which is up 11, about a billion dollars, Starbucks, even though Chipotle's lost 6.1 billion is correct. It's correct. And because when you get someone this monumental run the company, it is, there's hope for change.

Carl Quintanilla (4:05)

Speaking of change, do you think your May 1 conversation with Narasimhan was pivotal?

Jim Cramer (4:12)

What Narasimhan did, Narasimhan did, I, you know, it's not like the Roger Mudd interview.

David Faber (4:19)

No, you asked very hard questions that day after a very difficult quarter for the company. And Jim, you were uncharacteristically, I could say, quite critical and direct.