Diedrich Coffee Reports Third Quarter Net Loss of $0.01 Per Share
and Progress in All Business Segments IRVINE, Calif., April 21
/PRNewswire-FirstCall/ -- Diedrich Coffee, Inc. today announced
operating results for the third quarter of fiscal 2004. For the
twelve weeks ended March 10, 2004, the Company reported a net loss
of $69,000, or $0.01 net loss per share, compared to a net loss of
$219,000, or $0.04 net loss per share, during the third quarter of
fiscal 2003. Results for the third quarter improved from the prior
year quarter primarily due to increases in wholesale and other
revenue and international franchise revenues, offset in part by
lower retail sales. Retail sales declined primarily due to the sale
or closure of six company stores. For the 36 weeks ended March 10,
2004, the Company reported net income of $174,000, or $0.03 net
income per share, compared to net income of $483,000, or $0.09 net
income per share, in the first three quarters of fiscal 2003.
Year-to-date results as compared to the prior period primarily
decreased due to lower retail and wholesale and other sales offset
in part by increased franchise revenue. Roger Laverty, President
and Chief Executive Officer of the Company said, "As the results
indicate, there's still much to be done, but we are pleased with
the progress we've made in the past year. We can report some
success in each of our major business segments and have stabilized
the company operated retail stores. Diedrich Coffee stores that
reported a same store sales decline of 6.1% in the third quarter
last year reported a same store sales increase of 5.8% in this
year's quarter. We've achieved solid growth in the third party
wholesale coffee business with an increase in revenue of 22.7% over
the prior year quarter. We've achieved remarkable growth in our
international franchise operations, adding a net of 91 new
international stores since the beginning of last year's third
quarter. This progress resulted in part from adding capital
resources and labor. Although that adds expense to our operations,
it also provides great leverage for future sales and earnings
growth." Revenue Total revenue for the third quarter was
$12,500,000, an increase of 3.7%. For the first three quarters of
the current year total revenue was $38,062,000, a decrease of 3.3%.
For the third quarter of fiscal 2004, retail sales were down
$193,000, or 2.6%, from the third quarter of fiscal 2003. The
reduction in retail sales is primarily due to the sale or closure
of six coffeehouses accounting for a decline of $610,000. This
reduction was offset in part by revenue increases of $196,000, or
2.4%, from increased same store sales and $37,000 of increased
internet sales. For the first three quarters of fiscal 2004, retail
sales were down $1,936,000, or 8.2%, from the prior year. The
reduction in retail sales is primarily due to the sale or closure
of 14 coffeehouses accounting for a decline of $2,426,000. This
decrease was partially offset by an increase of 0.1% in comparable
retail sales that increased revenue by $103,000, newly opened or
transferred stores that increased revenue by $249,000 and improved
internet sales that increased revenue by $138,000 from the first
three quarters of the prior year. Wholesale and other revenue for
the quarter increased $355,000, or 11.6%. Sales to franchisees
increased $81,000, despite 20 less domestic franchise units in the
current year quarter, and sales to third parties increased $274,000
from the prior year quarter. For the first three quarters of fiscal
2004, wholesale and other revenues declined $136,000, or 1.2%, due
to reduced sales to franchisees. Compared to the prior year period,
sales to franchisees were down $699,000, due to a decline of 21
domestic franchise units since the beginning of fiscal 2003, but
wholesale sales to third parties increased by $563,000. Franchise
revenues were up $281,000, or 18.4%, for the current year quarter
and $762,000, or 17.1%, for the first three quarters of the current
year, compared to the prior year quarter and first three quarters,
respectively. Compared to the start of the prior year third
quarter, the Company had 20 fewer domestic franchise stores at the
end of the current quarter but 91 more international franchised
outlets, a 71 unit net increase in worldwide franchise locations.
For the first three quarters of the current year, compared to the
start of the prior year, the Company had 21 fewer domestic
franchise stores at quarter end versus the prior year, but 129 more
international franchised outlets, a 108 unit net increase. Costs
and Expenses Cost of sales and related occupancy costs improved, as
a percentage of retail and wholesale sales, from 56.1% in last
year's third quarter to 53.8% in the current quarter due primarily
to the closure of high cost stores and to exiting the high cost
wholesale grocery store distribution channel. The same factors
caused an improvement in costs for the first three quarters of the
current year compared to the prior year. Operating expenses
increased as a percentage of sales for the third quarter and first
three quarters of fiscal 2004 compared to the year earlier periods,
primarily due to planned increases in store labor and supervision.
This investment program is designed to increase company same store
sales. The increase in operating costs was partially offset by a
reduction in wholesale operating expenses related to exiting the
grocery store distribution channel. Bad debt charges declined from
the prior year mainly due to a bankruptcy of a major supplier
resulting in a $186,000 charge in last year's 36-week results.
General and administrative expense increased in amount and as a
percentage of revenue primarily as a result of filling a number of
key positions, including the Chief Executive Officer position, the
Executive Vice President of Development and the Director of Store
Operations which were vacant or did not exist in the prior year
periods. Conference Call Diedrich Coffee will be discussing these
financial results and related information with analysts and
investors in a conference call. The conference call, hosted by
Roger Laverty, CEO, and Marty Lynch, CFO, will take place on April
22, 2004 at 10:00 a.m. Pacific Time, 1:00 p.m. Eastern Time. The
conference call is simultaneously being webcast by CCBN and can be
accessed at Diedrich Coffee's website at http://www.diedrich.com/.
A replay of the conference call will also be available by telephone
at (800) 428-6051, pass code I.D. 351089, from 3:00 p.m. EST on
April 22, 2004 through midnight on May 6, 2004. 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 Gloria Jean's
Coffees, Diedrich Coffee, and Coffee People. The Company's 473
retail outlets, the majority of which are franchised, are located
in 35 states and 13 foreign countries. Diedrich Coffee also sells
its coffees through more than 460 wholesale accounts including
office coffee service distributors, restaurants and specialty
retailers, via mail order and the Internet. 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 ability to properly manage the repayment of the Company's
indebtedness, the successful management of Diedrich Coffee's growth
strategy, 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 July 2, 2003. For further information, please
contact Marty Lynch, Chief Financial Officer of Diedrich Coffee,
Inc., +1-949-260-6788. DIEDRICH COFFEE, INC. SELECTED CONDENSED
CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) (in thousands,
except per share amounts) OPERATIONS DATA: Twelve Twelve Thirty-Six
Thirty-Six Weeks Ended Weeks Ended Weeks Ended Weeks Ended March
10, March 12, March 10, March 12, 2004 2003 2004 2003 Retail sales
$7,281 $7,474 $ 21,725 $23,661 Wholesale and other revenue 3,407
3,052 11,114 11,250 Franchise revenue 1,812 1,531 5,223 4,461 Total
revenue 12,500 12,057 38,062 39,372 Cost of sales and related
occupancy costs 5,750 5,906 17,601 18,907 Operating expenses 3,868
3,898 11,550 12,092 Depreciation and amortization 513 421 1,541
1,327 General & administrative expenses 2,365 2,166 6,891 6,397
Provision for asset impairment and restructuring costs -- (49) 94
57 (Gain) loss on asset disposals 5 (117) 5 (119) Total costs and
expenses 12,501 12,225 37,682 38,661 Operating income (loss) (1)
(168) 380 711 Interest and other expense, net (58) (46) (186) (184)
Income (loss) before income tax provision (59) (214) 194 527 Income
tax provision 10 5 20 44 Net income (loss) $(69) $(219) $174 $483
Basic and diluted net income (loss) per share: $(0.01) $(0.04)
$0.03 $0.09 Shares used in per share Computations: Basic 5,161
5,161 5,161 5,161 Diluted 5,161 5,161 5,189 5,196 BALANCE SHEET AND
RETAIL UNIT COUNT DATA: March 10, 2004 July 2, 2003 Cash $1,384
$2,625 Accounts receivable, net 2,433 2,454 Inventories 2,575 2,611
All other assets 19,644 18,852 Total assets $26,036 $26,542
Accounts payable $2,030 $2,108 Current portion of long-term debt
1,517 1,459 All other current liabilities 4,321 3,875 Long-term
debt, excluding current portion 475 1,491 Other non-current
liabilities 930 1,020 Total stockholders' equity 16,763 16,589
Total liabilities and stockholders' equity $26,036 $26,542 Domestic
retail units 204 211 International retail units 269 206 Total
retail units (company and franchise, all brands) 473 417
DATASOURCE: Diedrich Coffee, Inc. CONTACT: Marty Lynch, Chief
Financial Officer of Diedrich Coffee, Inc., +1-949-260-6788 Web
site: http://www.coffeepeople.com/ Web site:
http://www.gloriajeans.com/ Web site: http://www.diedrich.com/
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