Peet's Coffee & Tea, Inc. Reports Q3 2008 Results and Gives Fiscal 2009 Earnings Growth Guidance of 20 to 25%
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Source: Peet's Coffee & Tea, Inc.
29/10/2008
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Emeryville, Calif., Oct 28, 2008 - Peet's Coffee & Tea, Inc. today announced results for its third quarter 2008 ended September 28, 2008.
For the 13 weeks ended September 28, 2008, net revenue increased 12.5% to $68.5 million from $60.9 million for the corresponding period of fiscal 2007. For the 39 weeks ended September 28, 2008, net revenue increased 15.2% to $205.7 million from $178.5 million for the corresponding period of fiscal 2007.
Net income for the quarter was $2.0 million or $0.15 per diluted share, compared to $1.8 million or $0.13 per diluted share last year. Year-to-date, net income was $7.1 million or $0.51 per diluted share, compared to $5.1 million or $0.36 per diluted share last year.
"We are on track to deliver within our earnings per share guidance for the year and well positioned for 20 to 25% earnings per share growth next year," said Patrick O'Dea, president and chief executive officer of Peet's Coffee & Tea. "While our grocery growth rate in the quarter was below our year-to-date trend, this was largely due to a shift in timing of new distribution and promotion activity from September into October. Overall, I'm encouraged by the strength of our business despite the economic environment. It's a tribute to the Peet's brand and people."
Financial and Operating Summary
Retail net revenue increased 11% to $45.9 million for the quarter from $41.5 million for the corresponding quarter last year. The increase was primarily attributable to new retail stores opened in the last 12 months and growth in existing stores. The Company opened three new retail locations during the quarter.
Specialty net revenue increased 16% to $22.6 million for the quarter from $19.4 million for the corresponding quarter last year. Within the specialty business, grocery grew 15%, foodservice and office sales were up 34%, and the home delivery business declined 2.5% compared to the same period last year.
Cost of sales and related occupancy costs decreased to 47.1% of total net revenue for the quarter compared to 47.9% for the corresponding quarter last year. The decrease from last year was due to procurement savings, increased prices in retail and grocery, and leverage of costs related to the roasting facility that opened last year, partially offset by higher green coffee costs.
Operating expenses as a percent of net revenue increased to 36.1% of total net revenue for the quarter compared to 35.5% for the corresponding quarter last year. The increase was due primarily to higher costs associated with expanding the grocery business.
General and administrative expenses increased to $5.2 million for the quarter from $4.9 million for the corresponding quarter last year primarily due to additional headcount and other investments to support the Company's growth.
Depreciation and amortization expenses increased to $3.2 million for the quarter from $2.6 million for the corresponding quarter last year. The increase was primarily due to the opening of 23 new retail stores in the last 12 months.
The Company ended the quarter with cash and cash equivalents plus marketable securities of $14.8 million.
Fiscal 2009 Outlook
Looking ahead, Peet's provided the following fiscal 2009 guidance:
-- Total net revenue is expected to grow 12 to 15%,
-- Diluted earnings per share is expected to grow 20 to 25% and be in the
$0.94 to $1.00 range, and
-- The Company is planning to open about 10 new retail locations and 30 to
40 new licensed locations.
PEET'S COFFEE & TEA, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share amounts)
September 28, December 30,
2008 2007
ASSETS
Current assets
Cash and cash equivalents $3,889 $15,312
Short-term marketable securities 10,893 7,932
Accounts receivable, net 9,642 8,287
Inventories 29,698 24,483
Deferred income taxes - current 2,937 2,950
Prepaid expenses and other 9,806 4,285
Total current assets 66,865 63,249
Long-term marketable securities - 7,831
Property, plant and equipment, net 107,564 99,231
Deferred income taxes - non current 3,000 3,353
Other assets, net 3,893 3,883
Total assets $181,322 $177,547
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and other accrued
liabilities $9,934 $10,104
Accrued compensation and benefits 10,470 8,909
Deferred revenue 4,477 5,856
Total current liabilities 24,881 24,869
Deferred lease credits and other
long-term liabilities 7,030 5,425
Total liabilities 31,911 30,294
Shareholders' equity
Common stock, no par value; authorized
50,000,000 shares; issued and
outstanding:13,653,000 and 13,932,000
shares 99,662 104,616
Accumulated other comprehensive income 19 52
Retained earnings 49,730 42,585
Total shareholders' equity 149,411 147,253
Total liabilities and shareholders' equity $181,322 $177,547
PEET'S COFFEE & TEA, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts)
Thirty-nine
Thirteen weeks ended weeks ended
September September September September
28, 2008 30, 2007 28, 2008 30, 2007
Retail stores $45,911 $41,450 $136,829 $121,436
Specialty sales 22,575 19,410 68,847 57,040
Net revenue 68,486 60,860 205,676 178,476
Cost of sales and related
occupancy expenses 32,249 29,142 96,478 84,706
Operating expenses 24,715 21,593 72,934 62,772
General and administrative
expenses 5,237 4,928 16,233 16,228
Depreciation and amortization
expenses 3,150 2,619 9,395 7,935
Total costs and expenses from
operations 65,351 58,282 195,040 171,641
Income from operations 3,135 2,578 10,636 6,835
Interest income 130 284 636 1,172
Income before income taxes 3,265 2,862 11,272 8,007
Income tax provision 1,247 1,026 4,127 2,953
Net income $2,018 $1,836 $7,145 $5,054
Net income per share:
Basic $0.15 $0.13 $0.52 $0.37
Diluted $0.15 $0.13 $0.51 $0.36
Shares used in calculation of
net income per share:
Basic 13,603 13,816 13,825 13,664
Diluted 13,899 14,168 14,111 14,057
SEGMENT REPORTING
(Unaudited, dollars in thousands)
Retail Specialty Unallocated Total
Percent Percent Percent
of Net of Net of Net
Amount Revenue Amount Revenue Amount Revenue
For the thirteen weeks ended September 28, 2008
Net revenue $45,911 100.0% $22,575 100.0% $68,486 100.0%
Cost of
sales and
occupancy 21,130 46.0% 11,119 49.3% 32,249 47.1%
Operating
expenses 19,940 43.4% 4,775 21.2% 24,715 36.1%
Depreciation
and
amortization 2,357 5.1% 372 1.6% $421 3,150 4.6%
Segment
operating
income 2,484 5.4% 6,309 27.9% (5,658) 3,135 4.6%
For the thirteen weeks ended September 30, 2007
Net revenue $41,450 100.0% $19,410 100.0% $60,860 100.0%
Cost of
sales and
occupancy 19,510 47.1% 9,632 49.6% 29,142 47.9%
Operating
expenses 18,109 43.7% 3,484 17.9% 21,593 35.5%
Depreciation
and
amortization 2,075 5.0% 314 1.6% $230 2,619 4.3%
Segment
operating
income 1,756 4.2% 5,980 30.8% (5,158) 2,578 4.2%
For the thirty-nine weeks ended September 28, 2008
Net revenue $136,829 100.0% $68,847 100.0% $205,676 100.0%
Cost of
sales and
occupancy 62,191 45.5% 34,287 49.8% 96,478 46.9%
Operating
expenses 58,791 43.0% 14,143 20.5% 72,934 35.5%
Depreciation
and
amortization 7,244 5.3% 1,029 1.5% $1,122 9,395 4.6%
Segment
operating
income 8,603 6.3% 19,388 28.2% (17,355) 10,636 5.2%
For the thirty-nine weeks ended September 30, 2007
Net revenue $121,436 100.0% $57,040 100.0% $178,476 100.0%
Cost of
sales and
occupancy 56,684 46.7% 28,022 49.1% 84,706 47.5%
Operating
expenses 52,517 43.2% 10,255 18.0% 62,772 35.2%
Depreciation
and
amortization 6,218 5.1% 985 1.7% $732 7,935 4.4%
Segment
operating
income 6,017 5.0% 17,778 31.2% (16,960) 6,835 3.8%
Thirteen weeks ended Thirty-nine weeks ended
September September September September
28, 2008 30, 2007 28, 2008 30, 2007
(unaudited, in thousands, (unaudited, in thousands,
except per share amounts) except per share amounts)
Net income, as reported $2,018 $1,836 $7,145 $5,054
Stock option review
professional fees - 188 16 1,228
Income tax benefit - (67) (6) (453)
Net income, excluding
fees $2,018 $1,957 $7,155 $5,829
After tax impact of
review professional fees $- $121 $10 $775
Diluted net income per
share:
Net income, as reported $0.15 $0.13 $0.51 $0.36
Stock option review
professional fees - 0.01 - 0.09
Income tax benefit - - - (0.03)
Diluted net income,
excluding fees* $0.15 $0.14 $0.51 $0.41
After tax impact of
review professional fees* $- $0.01 $- $0.06
* per share data may not sum due to rounding
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