Starbucks: Cathy Smith Named New Finance Chief; No Change to Our Exemplary Capital Allocation Rating

Wide-moat Starbucks announced the appointment of Cathy Smith as the new chief financial officer. Smith, who is currently the finance chief at the soon-to-go-private department store chain no-moat Nordstrom, will likely join over the next month. She will replace Rachel Ruggeri, who is leaving the firm after having served as the finance chief since 2021. We are maintaining our $87 per share fair value estimate, leaving shares rich. While we remain constructive about management's efforts to right the ship, we posit investors are overly optimistic about the firm's near-term recovery amid industrywide traffic challenges, promotional activity, and competition from at-home coffee.