Caribou Tops, Outlook Reaffirmed - Analyst Blog
November 11 2011 - 5:30AM
Zacks
Caribou Coffee Company,
Inc. (CBOU), the second largest premium coffeehouse
operator in the United States, posted adjusted earnings of 7 cents
per share in the third quarter of 2011, surpassing the Zacks
Consensus Estimate by a penny and the year-ago quarter earnings by
2 cents.
The company’s net sales during the
quarter increased 16.1% to $81.4 million, aided by improved
performance across all its business lines.
Performance
Highlights
Segment wise, Coffeehouse sales
escalated 3.7% year over year to $58.7 million during the quarter,
driven by a 4.1% jump in comparable coffeehouse sales. Commercial
sales soared 75.5% to $19.8 million, due to higher sales from
existing and new customers. Franchise revenues rose 30.3% to $3.0
million attributable to higher product sales and royalties.
Cost of sales and related occupancy
cost increased 28.3% to $41.9 million in the third quarter of 2011,
driven by higher sales in the quarter. Operating expense rose 4.6%
to $26.3 million attributable to unit growth and maintenance of
existing stores. General and administrative expense spiked 4.6% to
$7.8 million, but depreciation and amortization expenses declined
12.9% to $2.7 million due to less depreciable assets.
Total operating income expanded
52.3% to $2.8 million and operating margin enhanced 80 basis points
(bps) to 3.4% and total expense,
as a percentage of revenue, dropped due to operating
efficiencies.
Store Update
During the quarter, Caribou Coffee
opened 3 company-owned coffeehouses. At the end of the quarter, the
company had 409 company-owned and 150 franchised coffeehouses.
Financial
Position
Caribou Coffee ended the quarter
with cash and cash equivalents of $41.7 million and shareholders’
equity of $95.8 million.
Outlook
The Minneapolis, Minnesota-based
company reaffirmed its financial outlook for 2011, and expects to
achieve the higher end of its guidance. The company expects net
sales growth in the range of 11% to 13%. Adjusted earnings are
estimated in the range of 39 cents to 41 cents per share.
The company also provided its
outlook for 2012. The company expects net sales growth in the range
of 10% to 12%, comparable sales growth of 2% to 4% and adjusted
earnings per share in the range of 48 cents to 51 cents.
Our
Take
We expect estimates to
increase for fiscal 2011 and 2012 as the company witnesses
robust growth across all the segments and remains optimistic
on its outlook. Caribou Coffee continues to focus on unit growth
and plans to open 55 to 70 locations in 2012, implying a growth of
10% to 12%. The Zacks Consensus Estimates for 2011 and 2012 are
pegged at 41 cents and 50 cents, respectively.
One of Caribou Coffee’s
competitors, Domino's Pizza Inc. (DPZ) reported
third quarter 2011 adjusted earnings of 35 cents per share, which
outpaced the Zacks Consensus Estimate by 2 cents and the year-ago
quarter adjusted earnings by 8 cents. The upbeat result was
attributable to strong international and domestic performance.
CARIBOU COFFEE (CBOU): Free Stock Analysis Report
DOMINOS PIZZA (DPZ): Free Stock Analysis Report
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