IRVINE, Calif., Sept. 25 /PRNewswire-FirstCall/ -- Diedrich Coffee,
Inc. (NASDAQ:DDRX) today announced operating results for its fiscal
year ended June 27, 2007. For fiscal year 2007, the Company
reported a net loss of $1,765,000, or $0.33 per share, compared to
a loss of $7,796,000, or $1.47 per share, in fiscal year 2006. The
net loss for the fourth quarter of fiscal year 2007 was $2,344,000,
or $0.42 per share, compared to a net loss of $3,118,000, or $0.59
per share, for the fourth quarter of fiscal 2006. Results for
fiscal year 2007 include the after tax gain of $3,580,000, or $0.66
per share from the sale of the majority of its Diedrich Coffee and
Coffee People company-operated locations and a loss from
discontinued operations of $1,596,000, or $0.29 per share. The net
loss in fiscal year 2007 from continuing operations of $3,749,000,
or $0.70 per share, compares to a net loss of $5,453,000, or $1.03
per share, from continuing operations in fiscal year 2006.
Continuing Operations As previously announced, the Company has
closed the majority of its Diedrich Coffee and Coffee People
company-operated locations as part of its plan to focus on
strengthening its wholesale business and related distribution
channels including franchise locations. In fiscal year 2007, the
Company accounted for its Diedrich Coffee and Coffee People
company-operated retail operations as Discontinued Operations. The
Company continues to own and operate the wholesale, Gloria Jean's
retail and Gloria Jean's domestic franchise businesses that
together comprise Continuing Operations. The Company retained the
Diedrich Coffee and Coffee People brands for its wholesale and
franchise operations. The results from Continuing Operations for
the fourth quarter of fiscal year 2007 were a loss of $1,687,000,
or $0.31 loss per share, compared to a loss of $2,232,000, or $0.42
loss per share, for the fourth quarter of the prior year. The
current year quarter net income includes impairment charges of
$356,000 related to a Gloria Jean's company retail location and an
increase in income tax benefit of $640,000 over the prior year
quarter. The results for the fiscal year 2007 from Continuing
Operations were a loss of $3,749,000, or $0.70 loss per share
compared to a loss of $5,453,000, or $1.03 loss per share, for the
same period of the prior year. The current year loss includes
impairment charges and closed store reserves of $1,073,000 and
$609,000, respectively, and an increase in income tax benefit of
$1,560,000 over the prior year. Revenue Total revenue increased by
$1,890,000, or 20.3%, to $11,216,000 for the fourth quarter of
fiscal year 2007 as compared with total revenue of $9,326,000 in
the same period of the prior year. With respect to the components
of total revenue, wholesale revenue increased $2,048,000, up 30.3%,
franchise revenue decreased $206,000, down 18.7%, and retail sales
increased $48,000, up 3.3%. For fiscal year 2007, total revenue
increased by $5,880,000, or 19.1%, to $36,607,000 as compared with
$30,727,000 in the same period of the prior year. With respect to
the components of total revenue, wholesale revenue increased
$6,901,000, up 32.5%, franchise revenue decreased $261,000, down
6.9%, and retail sales decreased $760,000, down 13.3%, as compared
to the same period of the prior year. Wholesale revenue from sales
to office coffee distributors ("OCS") and foodservice customers
rose sharply for the quarter while roasted coffee sales to
franchise locations decreased marginally. For the fourth quarter of
fiscal year 2007, wholesale sales to OCS and foodservice customers
increased $2,207,000, or 41.7%, from the prior year quarter, with
Keurig "K-cup" sales increasing 48.1% from the prior year quarter.
Wholesale sales to franchise locations decreased $166,000, or 11.4%
for the fourth quarter of fiscal year 2007. For fiscal year 2007,
wholesale sales to OCS and foodservice customers increased
$7,063,000, or 45.5%, from the same period of the prior year, with
Keurig "K-cup" sales increasing 49.7% from the prior year and
wholesale sales to franchise locations having decreased $162,000,
or 2.8%. Franchise revenue decreased by $206,000 for the fourth
quarter of fiscal year 2007 and by $261,000 for fiscal year 2007,
primarily due to lower royalties and franchise store fees related
to the Gloria Jean's franchise system. Since the beginning of
fiscal 2006, the domestic franchise store count for all three
brands increased by a net of five locations (30 stores were opened,
34 were closed and a net of nine company stores were transferred to
franchisees). Comparable store sales for the fourth quarter of
fiscal year 2007 and fiscal year 2007 for Gloria Jean's franchise
locations decreased 7.5% and 4.0%, respectively Retail sales for
the fourth quarter of fiscal year 2007 increased $48,000 but
decreased $760,000 for fiscal year 2007 primarily as the result of
a net decrease of five company-operated Gloria Jean's locations
during the past two fiscal years. Comparable store sales at Gloria
Jean's company-operated locations decreased 8.0% during the fourth
quarter and have decreased 1.5% for the current fiscal year. This
decrease was offset by an increase in E- commerce sales in the
fourth quarter of fiscal year 2007 of $79,000, or 29.3% and an
increase for the fiscal year of $265,000, or 29.7%, as compared to
the prior fiscal year. Costs and Expenses Cost of sales and related
occupancy costs for the fourth quarter of fiscal year 2007
increased $1,842,000, or 29.9%, to $7,993,000 from $6,151,000 in
the prior year period. Wholesale cost of goods sold remained
relatively flat year over year as a percentage of wholesale
revenues at 80.8% for the current quarter compared to 76.8% in the
prior year. Occupancy costs for the fourth quarter of fiscal year
2007 decreased $213,000 to $330,000 from $543,000 in the prior year
period due primarily to fewer company operated Gloria Jean's
locations. For fiscal year 2007, cost of sales and related
occupancy costs increased $5,233,000, or 27.5%, to $24,244,000 from
$19,011,000 in the prior year period. Wholesale cost of goods sold
remained relatively flat year over year as a percentage of
wholesale revenues at 75.7% for the current year compared to 74.6%
in the prior year. Occupancy costs for fiscal year 2007 decreased
$118,000, or 9.4%, to $1,142,000 from $1,260,000 in the prior year
period primarily due to a $609,000 increase in the closed store
reserve associated with terminated Gloria Jean's store leases
offset by a decrease in rent expense associated with franchise
locations and company-operated Gloria Jean's retail stores.
Operating expenses increased $1,429,000, or 67.1%, to $3,558,000
from $2,129,000 and increased as a percentage of total revenue to
31.7% in the fourth quarter of fiscal year 2007 from 22.8% in the
fourth quarter of last year. For fiscal year 2007, operating
expenses increased $4,054,000, or 72.7%, to $9,631,000 from
$5,577,000 and increased as a percentage of total revenue to 26.3%
in the current fiscal year from 18.2% in the prior year. The
increase is primarily related to the realignment of certain
functions of the franchise segment that changed the classification
for franchise direct overhead costs previously reflected in general
and administrative expenses in the prior year and allocating them
to the appropriate profit center in fiscal 2007. These expenses are
related to franchise administration, operations, training, sales,
store design and marketing. For the fourth quarter of fiscal year
2007, general and administrative expenses decreased $1,875,000 to
$1,424,000 from $3,299,000 and decreased as a percentage of total
revenues to 12.7% in the current year quarter from 35.4% in the
fourth quarter of last year. For fiscal year 2007, general and
administrative expenses decreased $4,830,000 to $6,661,000 from
$11,491,000 and decreased as a percentage of total revenues to
18.2% in the current year from 37.4% in the prior year. In addition
to the change in the classification for franchise direct overhead
costs previously reflected in general and administrative expenses
in the prior year that are recognized as operating expenses in the
current year, the decrease was primarily a result of lower costs
associated with accounting, human resources, information systems
and stock option expense. This decrease was partially offset by
higher provision for management incentive compensation which is
payable upon achievement of company goals and achievement of
personal goals. The Company did not accrue for management incentive
compensation in the prior year. Discontinued Operations / Gain on
Sale The Company accounts for its Diedrich Coffee and Coffee People
company-operated retail operations that were sold or closed in
fiscal 2007 as Discontinued Operations. The Company's retail sales
will be limited to its e-commerce web stores and will continue to
operate a limited number of Gloria Jean's retail locations
primarily for use as franchise training stores. The Company
continues to own and operate the Gloria Jean's domestic franchise
and wholesale businesses that together comprise Continuing
Operations. For more information, please refer to the Form 10-K for
the fiscal year ended June 27, 2007. The loss for the fourth
quarter of fiscal year 2007 relating to Discontinued Operations was
$657,000, or $0.11 loss per share, compared to a loss of $886,000,
or $0.17 loss per share, in the same period of the prior year.
Results for fiscal 2007 include the after tax gain of $3,580,000,
or $0.66 per share and a loss relating to Discontinued Operations
of $1,596,000, or $0.29 loss per share, compared to a loss of
$2,343,000, or $0.44 loss per share, in the prior year. The loss
for fiscal year 2007 includes restructuring expenses, impairment
charges, closed store reserves and workers compensation accrual
increases. About Diedrich Coffee With headquarters in Irvine,
California Diedrich Coffee specializes in sourcing, roasting and
selling the world's highest quality coffees. The Company's three
brands are Diedrich Coffee, Gloria Jean's Coffees and Coffee
People. Diedrich Coffee sells its coffees through more than 800
wholesale accounts including office coffee service distributors,
restaurants and specialty retailers, and via the Company's web
stores. As of June 27, 2007, the Company's 153 retail outlets, the
majority of which are franchised, are located in 30 states. For
more information about Diedrich Coffee, call 800/354-5282, or visit
the Company's web sites 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 for the fiscal year ended June 27, 2007. Information
Contact: Sean McCarthy Chief Financial Officer (949) 260-6734
DIEDRICH COFFEE, INC. SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share amounts) OPERATIONS DATA: Sixteen
Sixteen Weeks Weeks Fifty-Two Fifty-Two Ended Ended Weeks Weeks
June 27, June 28, Ended Ended 2007 2006 June 27, June 28,
(unaudited) (unaudited) 2007 2006 Wholesale revenue $ 8,796 $ 6,748
$ 28,145 $ 21,244 Retail sales 1,519 1,471 4,948 5,708 Franchise
revenue 901 1,107 3,514 3,775 Total revenue 11,216 9,326 36,607
30,727 Cost of sales and related occupancy costs 7,993 6,151 24,244
19,011 Operating expenses 3,558 2,129 9,631 5,577 Depreciation and
amortization 320 353 1,059 1,177 General & administrative
expenses 1,424 3,299 6,661 11,491 Asset impairment and
restructuring costs 535 -- 1,073 -- Gain on asset disposals 36 (80)
14 (58) Total costs and expenses 13,866 11,852 42,682 37,198
Operating loss from continuing operations (2,650) (2,526) (6,075)
(6,471) Interest expense (20) (24) (230) (90) Interest and other
income, net 167 142 436 548 Loss from continuing operations before
income tax benefit (2,503) (2,408) (5,869) (6,013) Income tax
benefit 816 176 2,120 560 Loss from continuing operations (1,687)
(2,232) (3,749) (5,453) Discontinued operations, net of tax (657)
(886) 1,984 (2,343) Net loss $ (2,344) $ (3,118) $ (1,765) $
(7,796) Basic and Diluted net income(loss) per share: Loss from
continuing operations (0.31) (0.42) (0.70) (1.03) Income (loss)
from discontinued operations, net (0.11) (0.17) 0.37 (0.44) Net
loss (0.42) (0.59) (0.33) (1.47) Weighted average shares
outstanding: Basic and diluted 5,438 5,308 5,391 5,303 BALANCE
SHEET AND RETAIL UNIT COUNT DATA: June 27, June 28, 2007 2006 Cash
$ 6,873 $ 2,593 Accounts receivable, net 4,069 2,829 Inventories
4,323 3,416 Other assets 18,068 25,292 Total assets $ 33,333 $
34,130 Accounts payable $ 3,814 $ 2,929 All other current
liabilities 5,683 6,264 Other liabilities 684 670 Stockholders'
equity 23,152 24,267 Total liabilities and stockholders' equity $
33,333 $ 34,130 Total retail units (company and franchise, all
brands) 153 200 DATASOURCE: Diedrich Coffee, Inc. CONTACT: Sean
McCarthy, Chief Financial Officer of Diedrich Coffee, Inc.,
+1-949-260-6734 Web site: http://www.diedrich.com/
http://www.gloriajeans.com/ http://www.coffeepeople.com/
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