Updated - Diedrich Coffee Announces Long-Term Growth Strategy; Company to Focus Resources on Growing Wholesale and Franchise Bus
September 14 2006 - 8:21PM
PR Newswire (US)
Announces Changes to Board of Directors IRVINE, Calif., Sept. 14
/PRNewswire-FirstCall/ -- Recognizing its inherent strength as a
premier roaster of imported specialty coffee and the positive
trends in the wholesale market, Diedrich Coffee, Inc. (NASDAQ:DDRX)
one of the largest specialty coffee suppliers in the United States,
announced today that it plans to strengthen its two core business
segments by increasing the resources dedicated to its expanding
wholesale business and by narrowing its retail focus to its
franchise stores. "Diedrich Coffee has a long and storied tradition
of selecting and roasting the finest coffees in the world," said
Steve Coffey, chief executive officer of Diedrich Coffee. "The
changes that we are announcing today allow us to utilize our core
strength as the premier roaster of specialty coffee and to fulfill
our promise to sell great coffee to the widest possible market.
With the trends shifting towards specialty coffee in restaurants,
offices, and specialty stores, Diedrich Coffee has experienced
significant growth in our wholesale business. We are well
positioned to be a strong competitor with the potential for greater
growth and profitability in the future." According to Mr. Coffey,
Diedrich's wholesale operation has grown substantially over the
past 12 months, growing at a rate of 46% over the prior year with
sales last quarter trending up at 50% over the same period last
year. Third-party sales for the quarter ended June 28, 2006
represented 78% of all coffee sold by the company. As part of its
plan to narrow the focus of the retail side of the business on its
franchise operations, the company plans to close its Diedrich
Coffee and Coffee People company-owned locations but retain the
brands for its wholesale and franchise operations. To this end, the
company announced that it entered into an agreement today to sell
most of its 47 company-owned locations to Starbucks Coffee Company
for approximately $13.5 million. The completion of the sale is
subject to a number of conditions including the approval of
Diedrich Coffee's stockholders and the receipt of various
approvals, permits and consents in connection with the transfer of
the store locations. Assuming these conditions are met, it is
anticipated the sale will be completed within the next few months.
The Company noted that its agreement with Starbucks provided the
best solution for the company and its landlords. Most importantly
it allowed the company to provide its employees with the smoothest
transition possible. All non-management store employees in good
standing at the stores being sold will be offered positions with
Starbucks and store managers and assistant managers will be
provided the opportunity to interview for positions. The company
said that its Gloria Jean's franchise system and the
franchisee-owned Diedrich Coffee stores are not directly affected
by the sale transaction or other strategic changes. "Our franchise
partners will benefit from our new strategic direction as they will
have a financially stronger and more focused company as their
partner without the distraction of also running two company store
systems," Mr. Coffey said. "The Diedrich Coffee and Coffee People
stores are not expected to transition for several months. Until
then, the stores will remain open and continue to serve our guests
as they have in the past. Additionally, our customers will be able
to continue to purchase the same rich and flavorful coffee at
franchise locations and through the company's websites,
http://www.diedrich.com/, http://www.gloriajeans.com/ and
http://www.coffeepeople.com/," Mr. Coffey added. In an unrelated
matter, the company also announced today that Peter Churm has
retired from the board of directors. The board has appointed Greg
Palmer to fill the vacancy. Most recently Mr. Palmer served as
president and chief executive officer of RemedyTemp, Inc. "On
behalf of the board of directors I would like to thank Peter for
his many years of exemplary service and also express how pleased we
are that Greg is joining the board. His executive management
background and experience in sales oriented companies will be
invaluable as the company moves forward," said Paul Heeschen,
Diedrich Coffee's Chairman. About Diedrich Coffee Headquartered in
Irvine, California, Diedrich Coffee specializes in sourcing,
roasting and selling the world's highest quality coffees. The
Company's three brands are Gloria Jean's Coffees, Diedrich Coffee
and Coffee People, which it sells through more than 800 wholesale
accounts including coffeehouses, office coffee service
distributors, restaurants, specialty retailers as well as
direct-to-consumer via the Internet. The company's 200 domestic
retail outlets, the majority of which are franchised, are located
in 33 states. For more information about Diedrich Coffee, call
800/354-5282, or visit the Company's Websites at
http://www.diedrich.com/, http://www.gloriajeans.com/, or
http://www.coffeepeople.com/. Forward Looking Statements Statements
in this news release that relate to future plans, financial results
or projections, events or performance are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, and fall under the safe harbor. Actual results
and financial position could differ materially from those
anticipated in the forward-looking statements as a result of a
number of factors, including, but not limited to, the financial and
operating performance of the Company's retail operations, the
Company's ability to maintain profitability over time, the
successful execution of the Company's growth strategies,
franchisee's adherence to the Company's practices, policies and
procedures, the impact of competition, the availability of working
capital, and other risks and uncertainties described in detail
under "Risk Factors and Trends Affecting Diedrich Coffee and its
Business" in the Company's annual report on Form 10-K/A for the
fiscal year ended June 29, 2005. Contact: Sitrick and Company Maya
Pogoda (310) 788-2850 DATASOURCE: Diedrich Coffee, Inc. CONTACT:
Maya Pogoda of Sitrick and Company, +1-310-788-2850, for Diedrich
Coffee, Inc. Web site: http://www.diedrich.com/
http://www.gloriajeans.com/ http://www.coffeepeople.com/
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