Good morning. Amid its turnaround push, Starbucks Corporation has poached one of the best CFOs in retail.
The coffee house chain, (No. 116) in the Fortune 500, announced on Tuesday that Cathy R. Smith, currently CFO at retailer Nordstrom Inc., will succeed Rachel Ruggeri, finance chief since 2021, and an almost 20-year Starbucks veteran, who is leaving the company. Ruggeri’s separation from the company is “without cause,” Starbucks said in an SEC filing, and she will stay on to assist with the transition. Smith will join Starbucks in the next month, CEO Brian Niccol said in a letter to Starbucks staff.
In May 2023, Smith joined Nordstrom as finance chief, after working for health insurer Bright Health Group as CFO and chief administrative officer, which has since rebranded as NeueHealth Inc. Smith previously served as CFO of retailers Target Corp., Walmart International, and GameStop Corp.
But now Niccol and Smith are tasked with returning Starbucks to its former glory. Niccol’s “Back to Starbucks” is a plan to counter falling sales and improve customer experiences.
“Cathy brings incredible knowledge and extensive experience in retail, global operations, and turnaround success,” he said in Tuesday’s letter.
I asked Dan Su, an equity analyst for Morningstar, for his thoughts on Starbucks’ new hire.
“We see Smith as a strong finance leader to partner with CEO Brian Niccol and steer the coffee chain through turnaround efforts to revive store traffic growth and reinforce its competitive edge,” Su told me.
It’s expected that Smith will leverage her experience as the CFO of large retail companies to help shape and implement investment strategies to fuel growth and long-term value creation, he said.
“Moreover, as Starbucks reviews its growth prospects in international markets, including in China where the firm is rumored to be evaluating refranchising options amid intense local competition, Smith’s international experience could prove helpful,” Su noted.
From the lens of an executive search firm, I asked Tony Morales, vice chairman of N2Growth, why he thinks Smith was Starbucks’ board’s top choice. Morales leads Fortune 500 CFO searches for the firm.
Smith may be the “singular most seasoned CFO with runway left in her career on the market today,” Morales told me. For example, she roughly doubled Target’s enterprise value in her tenure that started just after the sale of their pharmacy business to CVS, he said.
“But any board knows that Smith brings more than just retail experience,” Morales said. “She’s led through every climate: the industry-defining merger of Centex and Pulte in 2009, the boom and bust of Bright Health, and just months ago landed a deal to take Nordstrom back to private ownership led by the Nordstrom family.”
Smith’s salary will be $925,000 a year, with a bonus target of 125% of her base pay that will be prorated for fiscal year 2025. She will also receive a $5 million signing bonus to make up for cash incentives and equity awards she’s losing for leaving Nordstrom, Starbucks said in a filing.
The signing bonus amount is not unusual for high-caliber CFOs like Smith, Morales said. “In recent years, we’ve seen even larger cash signing bonuses,” he said.
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Sheryl Estrada
sheryl.estrada@fortune.com
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