Jim Cramer on Wednesday blasted Starbucks CEO Laxman Narasimhan in a CNBC interview after the coffee giant delivered a terrible quarter and a guidance miss. With Starbucks shares down more than 15% following Tuesday evening’s quarterly release and conference call, Jim asked Narasimhan in an interview on CNBC why the Club should hold the stock for the portfolio for another quarter. Narasimhan responded, in part, by saying: “It is true we had a tough quarter, but we have an action plan against that. … We are completely focused on a plan that is not business as usual to reverse some of the trends that we have seen. And we have demand that we can meet. We have products in the pipeline that are strong. … I think what you’ve seen is real progress as a business. If you look at the growth in core categories.” The CEO said that taken all together, the company sees a “foundation of a business that is really strong.” Following contentious exchanges with Narasimhan on ” Squawk on the Street ,” Jim said, “I am stunned.” He added, “I am distressed about this situation even knowing Mr. Narasimhan has an action plan.” Jim said it’s a matter of trust, saying the CEO should not have tried to paint a picture of a company that can build on strengths to right the ship. The message from Narasimhan to Jim on TV: the quarter was bad due to China’s choppiness and bad weather in the U.S. The CEO announced an action plan centered around winning more business from the occasional Starbucks customer. Jim questioned Narasimhan at every turn and strongly asked why Starbucks was still moving forward with expansion plans. The CEO pointed to growth in markets such as Latin America and Japan. He said the U.S. business of Starbucks is holding market share. Jim said the read-throughs from Tim Horton’s, McDonald’s and Dunkin’ Donuts suggest otherwise. Narasimhan said loyal Starbucks customers are engaged a despite quarter-over-quarter decline in loyalty program users and long wait times to complete transactions online. The CEO said wait times on the app are improving. Shortly after the CNBC interview, Cramer reflected on meetings he had with Narasimhan several times when he first took over as CEO from Howard Schultz. Cramer said during Wednesday’s Investing Club Morning Meeting livestream that he had initially thought Narasimhan could be successful in the job but now questions whether that’s still possible given all the headwinds Starbucks is facing. The Club on Tuesday evening downgraded its rating to a 2 and cut the price target on Starbucks to $90 per share. In the Club’s Starbucks earnings commentary , Director of Portfolio Analysis Jeff Marks wrote: “We have been saying for weeks to be ready for a miss when it came time for Starbucks to report. We thought the setup was similar to its earnings report a quarter earlier when the entire market knew a miss was coming. When management missed last quarter by 3 cents per share but said it had multiple paths to achieving its earnings growth outlook between 15% to 20%, the stock didn’t go down on the news.” Jim’s Charitable Trust, the portfolio used for the CNBC Investing Club , owns shares of Starbucks. CNBC reached out to Starbucks for comment on the interview.
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