Friday's Headlines: Starbucks Finally Unveils New CEO
There will be no Market Headlines on Monday the 5th of September as the markets are closed due to Labor Day in the United States. We'll return with all the biggest market news on Tuesday the 6th of September.
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Lemonade (LMND) +3.4%
Netflix (NFLX) +2.9%
Zillow (Z) +2.7%
Nordstrom (JWN) +2.2%
Moving Down ⬇️
Veeva Systems (VEEV) -14.0%
PagerDuty (PD) -7.4%
Datadog (DDOG) -7.4%
Bill.com (BILL) -7.4%
Smartsheet (SMAR) -7.4%
Here are the stories that you need to know ahead of market-open today, Friday the 2nd of September.
Starbucks Finally Unveils New CEO ☕️
After months of searching, Starbucks (SBUX) has finally found a new CEO to replace interim chief Howard Schultz. The global coffee chain announced that Laxman Narasimhan, the current CEO of health and hygiene firm Reckitt, will join the company in October after he announced his departure from Reckitt on Thursday.
Narasimhan will join Starbucks in October, where he’ll take some time to learn about the company’s inner workings and general operations, before ascending to the role of CEO in April of next year. He’ll take over the reins from Schultz, the famed former CEO who returned to the company after his successor abruptly left in April of this year. A news release from the firm indicated that Shultz will work closely with Narasimhan, acting as an advisor for the foreseeable future.
When speaking of Narasimhan’s appointment, Starbucks board chair Mellody Hobson explained that:
“His deep, hands-on experience driving strategic transformations at global consumer-facing businesses makes him the ideal choice to accelerate Starbucks' growth and capture the opportunities ahead of us.”
The incumbent CEO will have his work cut out for him, with Starbucks facing a strong unionization push, struggles in China following rolling lockdowns, and a share price that has lost over 26% year-to-date. While it might take some time to see Narasimhan’s influence take shape as Schultz maintains a strong presence at the firm, perhaps change could be exactly what Starbucks needs as it tries to recapture some of the growth that made it one of the world’s most recognizable brands.
Lululemon Flexes Its Financial Muscle 💪
Lululemon (LULU) posted a more than solid earnings report last night, as it beat Wall Street expectations for both earnings and revenue by a comfortable margin. The athletic apparel company also strengthened its outlook for the remainder of the year in a real show of strength amidst wider market turmoil.
Lululemon posted adjusted earnings per share (EPS) of $2.20 on revenue of $1.87 billion — easily outpacing the analyst expectations of $1.87 per share and $1.77 billion respectively. This outperformance has sent shares skyrocketing pre-market, with the company’s stock currently up almost 10% ahead of market open.
Lululemon has managed to avoid some of the inflationary pressure witnessed by other retailers due to its typically higher-income consumer base, who appear not to be as affected by the current crunch. Store traffic and online traffic rose by 30% and 40% respectively, as net sales increased by 27%. Meghan Frank, the company’s CFO, outlined that, “despite the challenges around us in the macro-environment, guest traffic in our stores and on our e-commerce sites remains robust, which speaks to the strength of our multi-dimensional operating model.”
With an increased outlook for the remainder of the year, and a reaffirmation of the company’s commitment to double net revenue from 2021 to 2026, all eyes will be on Lululemon’s next couple of earnings calls to see if it can maintain its current pace. The holiday quarter will be massive for the company in achieving these lofty goals, but so far, it seems to be hitting all the right notes on the way to continued success.
PagerDuty Soars Post Earnings 🚀
The Dev-Ops specialist PagerDuty (PD) rebounded today after an earnings report that surpassed both its own guidance and analysts’ expectations. The company delivered revenue of $90 million — representing 34% growth — on an adjusted operating loss of just $3 million. Management’s ever-important guidance also pleased investors, with the company raising its full-year revenue forecast ever so slightly.
PagerDuty’s consistency has been impressive over the past year as it continues to acquire new customers while growing from within its existing base. Large customers who contribute more than $100,000 in revenue grew 38% year-over-year, while the company’s dollar-based net revenue retention rate was 124% for the quarter. These two factors have led to consistent revenue growth of over 30% for the past five quarters.
CEO Jennifer Tajeda’s comments will also buoy investors as she cites a focus on profitability and macro-resistant spending trends:
“We continued to see strong demand across regions and verticals, where our immediate, high ROI is welcome by customers seeking to improve productivity and efficiency. As essential infrastructure for modern enterprises … we are especially well positioned in an uncertain macro environment. We remain confident in our ability to continue to execute well as we progress towards profitability.”
PagerDuty started life in the world of DevOps, a practice combining software development and IT operations. Its incident response and management tools became wildly popular amongst developers as the complexity of modern technology stacks grew. The company has expanded beyond just DevOps, with its Operations Cloud now covering other verticals such as process automation, customer service operations, and even AI operations.
PagerDuty shares are up 9% in pre-market trading at time of writing, however, the stock is trailing the wider market year-to-date after a rotation away from tech.