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Caribou Coffee CEO Michael Coles steps down

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Caribou Coffee CEO
Michael Coles has stepped down as CEO of Caribou Coffee, which is based in Minneapolis.
MPR Photo/Curtis Gilbert

(AP) - Chief Executive Michael Coles stepped down as head of Caribou Coffee Monday after nearly five years as head of the company that expanded from 207 stores to 473 stores during his tenure.

      Caribou's stock began trading at $15.51 a share in 2005 and has since lost two-thirds of its value, closing Monday at $5.15.

      Rosalyn T. Mallet, president and chief operating officer, will take over as interim CEO and board member Gary A. Graves was named non-executive chairman of the board. The company said Coles, formerly president, CEO and board chairman, will remain a board member.

      Caribou planned a conference call with stock analysts Tuesday morning to discuss the change.

Cuppa joe?
Caribou Coffee's first store opened in 1992. It now has hundreds of stores in 13 states, and is the second-largest specialty coffee company in the U.S. It's headquartered in Minneapolis.
Photo by Tim Boyle/Getty Images

      Coles has been commuting to Caribou's Brooklyn Center headquarters from his home in Atlanta. He issued a statement saying it was "time to step aside and let a new CEO take the company through its next phase of growth."

      During his tenure, Caribou extended its brand with coffee-flavored breakfast bars made by General Mills, coffee-flavored ice cream from Kemps and this year the pilot launch of a coffee-flavored ice drink made by Coca-Cola.

      But profits haven't followed the growth. For this year, the average analyst estimate calls for Caribou to lose $1.01 per share.

In 2008, the company is projected to lose 63 cents per share. While market leader Starbucks has an operating margin of 10 percent, Caribou's is now negative 4 percent.

      "There was a lot of top-line related expansion that came under his leadership, but the market is still waiting to see the profitability from that," said David Tarantino, an analyst at Robert W. Baird & Co.

      At least 25 underperforming stores were closed this year and the company moved toward more licensing and franchising. But Tarantino said those steps came too slowly.

      Mallet, the new interim CEO, joined Caribou this year. She has 30 years of experience at food and hospitality companies, including a previous job as senior vice president for Carlson Companies.

      Caribou was founded in 1992 by John and Kim Puckett, who sold the company in 2001 to Crescent Capital Investments, a private equity firm based in Atlanta. 

Caribou is the nation's second-largest specialty coffee company behind Starbucks. Caribou employs more than 5,000 people in 18 states and the District of Columbia.       

             (Copyright 2007 by The Associated Press.  All Rights Reserved.)