Caribou Coffee Company, Inc.
) posted earnings of 8 cents per share in the third quarter of
2012, which surpassed the Zacks Consensus Estimate of 6 cents and
year-ago quarter adjusted earnings of 7 cents.
CARIBOU COFFEE (CBOU): Free Stock Analysis
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Revenue during the quarter slipped 5.2% to $77.2 million as
commercial sales dropped significantly. However, reported sales
beat the Zacks Consensus Estimate of $75.0 million.
Segment wise, Coffeehouse sales crept up 4.0% year over year to
$61.0 million during the quarter, driven by a 3.5% rise in
comparable coffeehouse sales. The increase in comparable
coffeehouse sales was driven by higher traffic and favorable
beverages sales. Commercial sales plunged 39.9% to $11.9 million,
on the back of drop in sales from the Keurig single-serve
platform and royalties, partially offset by higher sales from
existing and new customers in the foodservice and grocery
channels. Franchise revenues shot up 45.0% to $4.3 million,
attributable to unit growth, higher product sales and royalties.
Cost of sales and related occupancy costs dropped 11.3% to $37.2
million in the third quarter of 2012, as the Keurig single-serve
platform generated lower sales. Operating expenses inched up 1.0%
to $26.3 million as legislative changes resulted in increased
expenses for debit card transactions. General and administrative
expense rose 5.1% to $8.2 million, while depreciation and
amortization expenses were down $0.1 million to $2.5 million.
Total operating income was flat year over year at $2.8 million,
while operating margin expanded 20 basis points (bps) to 3.6%,
due to lower depreciation and amortization expenses.
Caribou Coffee ended the quarter with cash and cash equivalents
of $28.6 million and shareholders' equity of $100 million.
During the quarter, the company opened 14 franchised coffeehouses
and 6 company-owned coffeehouses. The company also closed 6
company-owned coffeehouses. As of September 30, 2012, Caribou
Coffee had 610 coffeehouses, of which 408 were company-owned and
The company remains focused on unit growth of 10% to 12% in 2012
The company narrowed its earnings outlook for 2012 from 43-46
cents to 44-46 cents per share. However, Caribou Coffee
anticipates that net sales growth will continue to remain flat
year over year.
For 2013, Caribou Coffee, the second largest premium coffeehouse
operator in the United States, anticipates net sales growth of 6%
to 8% and earnings per share in the range of 52 cents to 55 cents
During the quarter, sales slipped and the preliminary 2013
earnings guidance was also below the Zacks Consensus Estimate of
57 cents. Moreover, food cost pressure coupled with the lingering
impact of Hurricane Sandy will continue to be a headwind.
However, to drive sales, Caribou Coffee remains focused on
introducing innovative food and beverage products in the retail
coffeehouses. The company also continues to drive growth by unit
One of Caribou Coffee's competitors,
Domino's Pizza Inc.
) reported third quarter 2012 adjusted earnings of 43 cents per
share, ahead of the Zacks Consensus Estimate of 41 cents. The
results compared favorably with the year-ago adjusted earnings of
35 cents as well.
Caribou currently retains a Zacks #3 Rank, which translates into
a short-term 'Hold' rating. We are maintaining our long-term
'Outperform' recommendation on the stock.