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Still no IPO, but another new CEO for Seattle's second largest coffee enterprise
Tully's Coffee has lost yet another CEO. Seattle's second biggest coffee enterprise has announced that Carl Pennington will retire at the end of this month.
According to the Seattle Times, he is the seventh CEO to cycle through the company since founder Tom O'Keefe stepped down from the post a decade ago.
The new CEO, effective one week from today (on April 1st) is Scott Pearson. He's a former executive vice president of the Mercer-Island based bottled-water company, Advanced H2O. Prior to that, Pearson worked in sales for Coca Cola and IBM.
A shortage of cash at the Seattle-based company seems to be at least part of the cause of the revolving door at the top. A securities filing warned last fall that the chain could run out of cash by June. Puget Sound Business Journal Columnist Patti Payne does a nice job summarizing the company's leadership changes of the last decade:
The top position at Tully’s has changed hands almost regularly, with the exodus starting in 2001 with Jamie Colbourne, followed by Mark Evanger, who came in as interim CEO for a short time after Colbourne’s abrupt exodus. Next came Tony Gioia, John Dresel and John Buller, and now Pennington, whose contract was up in January and was not renewed, Payne writes.
A long-hoped-for IPO has not materialized. Shares in the company are regulated by the SEC, but they are not publicly traded.
A recent buyout of Tully's wholesale business by Vermont-based Green Mountain Coffee has allowed the company to focus exclusively on its retail coffeehouse outlets, which also include licensed counters in some grocery stores.
Green Mountain makes the single-serve Keurig coffee machines that Starbucks is betting will help leverage its holding power in the fast-growing single-serve sector. I wrote about the recent Green Mountain deal with Starbucks a couple of weeks ago. A spokesman for the Tully's coffee shops chain declined to comment on the effect of those changes on the second-largest player in the coffee shop business in Seattle, except to say the Keurig machines would still be sold at Tully's coffee shops.
Tully's VP for marketing and business development, Scott Earle, puts a positive spin on the changes at the top of his company. He says Pennington meant to stay on only one year when came out of retirement to take on the CEO role three years ago and got hooked on the people at the company, staying two years longer because "he fell in love with the people" and "he's a competitive guy."
Pennington Will Still Play Role
The company says Pennington, who is 73, wants to spend more time with his family in Boise. He will continue to serve as chairman of the Tully's board until the next shareholder meeting, which is expected to occur later this spring. The intent is for him to work side by side with his successor in the months ahead.
According to Earle, Tully's has about 200 stores in the US, most of them in the pacific northwest. Following significant reorganization in recent years, he says the Seattle-based headquarters has only about 30 people in a total US payroll of approximately 700 employees. The corporate headquarters are still located on the west side of I-5, in the former Rainer brewery building, now with a big green T on top.
Tully's international division (a separate entity with license to the brand) has 400 stores in Asia, almost all of which are in Japan.