Diedrich Coffee Reports First Quarter Results IRVINE, Calif., Nov.
11 /PRNewswire-FirstCall/ -- Diedrich Coffee, Inc. (NASDAQ:DDRX)
today announced operating results for its first fiscal quarter of
2005, which ended September 22, 2004. For the quarter, the Company
reported a net loss of $468,000, or $0.09 per share, compared to a
loss of $188,000, or $0.04 per share, for the first quarter of the
prior fiscal year. Roger Laverty, Diedrich Coffee's Chief Executive
Officer, stated "The seasonality of the Company's business
typically produces first quarter losses. Summer months are
traditionally the slowest periods of the year. We also expected a
higher loss in this year's first fiscal quarter due to the cost of
an expanded organization to manage our planned acceleration of new
store growth." Laverty went on to say, "We're pleased that the
programs we put in place a year ago are now bearing fruit. For the
second quarter in a row, our revenue increased in every segment of
the business. The increased financial and human resources that we
have invested in our retail and wholesale segments have resulted in
strong retail comparative sales gains and solid growth of our third
party wholesale sales. In the franchise segment, the international
operations continue to experience robust growth and we've also
begun to stabilize the domestic franchise operations that have
declined in recent years. We believe that the Gloria Jean's
domestic franchise operations have major growth potential and we
have expanded our business development, construction and related
support areas to focus on that opportunity." Revenue Total revenue
for the twelve weeks ended September 22, 2004, was $12,260,000, an
increase of $836,000 (7.3%) compared with revenue of $11,424,000
for the prior year period. Segment increases were $256,000 (3.7%)
in retail sales, $490,000 (17.0%) in wholesale sales, and $90,000
(5.4%) in franchise revenue. The increase in retail sales for the
first fiscal quarter versus the prior year quarter was the result
of a $411,000 (6.2%) increase in same store sales and a $25,000
(39.6%) increase in e-commerce retail sales, net of a reduction of
$344,000 due to sale or closure of six company operated stores.
System-wide comparable store sales at Diedrich Coffee brand
coffeehouses open for at least one year increased 6.8% for the
quarter, as compared with the prior year, while comparable store
sales at the Company's Coffee People locations increased 7.5%
during this same period. System-wide comparable store sales at
Gloria Jean's units declined 1.2% during the first fiscal quarter
compared to the prior year quarter. The increase in wholesale sales
was primarily in Keurig "K-cup" and other sales to third party
customers that increased $422,000 (24.3%) and an increase of
$68,000 in sales of roasted coffee to franchisees. Franchise
revenue increased primarily due to international royalties and new
store fees that increased by $197,000 as a result of a 90 unit
increase since the beginning of fiscal 2004. This was offset by a
$84,000 decline primarily in the area development dissolution
agreement settlements and a $23,000 decline in domestic royalties
due to reduction of 12 units since the beginning of fiscal 2004.
Costs and Expenses Cost of sales and related occupancy costs
increased from 52.4% of retail and wholesale sales in the prior
year quarter to 53.4% in the current quarter. The increased costs
were primarily due to increased costs in the wholesale segment as a
result of an increase in inventory valuation provisions and higher
allocation of depreciation charges to this segment. Operating
expenses improved on a margin basis, declining from 32.4% of sales
in the first quarter of last year to 31.9% in the first quarter of
the current year. The improvement was largely due to a reduction in
expense as a result of exiting the wholesale grocery store channel
following the first quarter of the prior year. General and
administrative expenses increased 22.9%. More than half of this
increase was due to expansion of the business development,
construction and systems areas to accommodate planned growth. Other
increases included audit fees, bad debt provision and accrued
incentive compensation that is payable only upon achievement of
earnings goals. Conference Call Diedrich Coffee will be discussing
these financial results and future prospects with analysts and
investors in a conference call. The conference call, hosted by
Roger Laverty, CEO, and Marty Lynch, CFO, will take place on
November 12, 2004 at 8:00 a.m. Pacific Time (11:00 a.m. Eastern
Time). The conference call will be simultaneously 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 (888)-203-1112, pass code I.D. 815728,
from 11:00 a.m. Pacific Time on November 12, 2004 through midnight
on November 26, 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 493 retail outlets, the majority
of which are franchised, are located in 33 states and 10 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 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 30, 2004. For further information please
contact: Marty Lynch, Chief Financial Officer of Diedrich Coffee,
Inc., +1-949-260-6788 DIEDRICH COFFEE, INC. SELECTED CONSOLIDATED
FINANCIAL INFORMATION (UNAUDITED) (in thousands, except per share
amounts) OPERATIONS DATA: Twelve Weeks Ended Twelve Weeks Ended
September 22, 2004 September 24, 2003 (Restated) Retail sales
$7,129 $6,873 Wholesale and other revenue 3,364 2,874 Franchise
revenue 1,767 1,677 Total revenue 12,260 11,424 Cost of sales and
related occupancy costs 5,607 5,111 Operating expenses 3,906 3,700
Depreciation and amortization 545 587 General & administrative
expenses 2,634 2,144 Gain on asset disposals (15) -- Provision for
asset impairment & restructuring -- 4 Total costs and expenses
12,677 11,546 Operating loss (417) (122) Interest expense and other
income, net (44) (57) Loss before income tax provision (461) (179)
Income tax provision 7 9 Net loss $(468) $(188) Basic and diluted
net loss per share: $(0.09) $(0.04) Basic and diluted weighted
average shares outstanding 5,163 5,161 BALANCE SHEET AND RETAIL
UNIT COUNT DATA: September 22, 2004 June 30, 2004 Cash $1,360
$1,799 Accounts receivable, net 2,807 2,337 Inventories 2,957 2,815
Other assets 19,360 18,691 Total assets $26,484 $25,642 Accounts
payable $1,918 $2,144 Current portion of long-term debt 425 200 All
other current liabilities 5,362 4,758 Long-term debt, excluding
current portion 1,508 783 Other non-current liabilities 856 880
Total stockholders' equity 16,415 16,877 Total liabilities and
stockholders' equity $26,484 $25,642 Domestic retail stores 197 200
International retail stores 296 282 Total retail stores (Company
and franchise, all brands) 493 482 DATASOURCE: Diedrich Coffee,
Inc. CONTACT: Marty Lynch, Chief Financial Officer of Diedrich
Coffee, Inc., +1-949-260-6788 Web site: http://www.gloriajeans.com/
Web site: http://www.coffeepeople.com/ Web site:
http://www.diedrich.com/
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