Caribou Coffee Company, Inc.
), the second largest premium coffeehouse operator in the United
States, posted earnings of 6 cents per share in the first quarter
of 2012, in line with the Zacks Consensus Estimate, but missing the
year-ago quarter adjusted earnings of 8 cents. The earnings fell on
year-over-year basis due to food cost inflation in the first half
The company's sales during the quarter increased 11.4% to $80.5
million, aided by improved performance across all its business
Segment wise, Coffeehouse sales crept up 3.7% year over year to
$57.6 million during the quarter, driven by a 2.5% rise in
comparable coffeehouse sales. The upside in comparable coffeehouse
sales was driven by higher traffic and favorable beverage sales
mix. Commercial sales surged 49.9% to $11.7 million, on the back of
higher sales from the Keurig single-serve platform as well as
existing and new customers in the foodservice and grocery channels.
Franchise revenues rose 10.6% to $3.0 million, attributable to
higher product sales and royalties.
Cost of sales and related occupancy cost increased 26.5% to
$42.1 million in the first quarter of 2012, driven by higher sales
and commodity costs in the quarter. Operating expense climbed 4.7%
to $25.4 million, attributable to increased labor costs. General
and administrative expense fell 6.8% to $7.3 million and
depreciation and amortization expenses were down 13.8% to $2.5
Total operating income plunged 26.9% to $2.1 million, while
operating margin contracted 140 basis points (bps) to 2.6%, due to
higher cost of sales and related occupancy cost as well as
escalation in operating expenses.
Caribou Coffee ended the year with cash and cash equivalents of
$42.5 million and shareholders' equity of $103.1 million.
The Minneapolis, Minnesota-based company trimmed its financial
outlook for 2012 based on the slowdown in the single cup business.
The company expects earnings per share in the range of 47 cents to
50 cents compared with the earlier expectations of 48 cents to 51
cents. Moreover, the company anticipates net sales growth in the
range of 6% to 8%, lower than its previously expectation of
We expect estimates to decrease for fiscal 2012 as the company
lowered its outlook for 2012 and food cost pressure will remain 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
expansion and plans to open 55 to 70 locations in 2012, implying an
upside of 10% to 12%. The Zacks Consensus Estimates for fiscal 2012
and 2013 are 50 cents and 65 cents per share, respectively,
reflecting year-over-year growth of 20.2% and 28.1%.
One of Caribou Coffee's competitors,
Chipotle Mexican Grill Inc.
) has reported first-quarter 2012 earnings of $1.97 per share,
surpassing the Zacks Consensus Estimate of $1.93 as well as the
year-earlier earnings of $1.46. The better-than-expected results
were driven by double-digit top-line growth and margin
Caribou currently retains a Zacks #3 Rank, which translates into
a short-term Hold rating. We are maintaining our long-term Neutral
recommendation on the stock.
CARIBOU COFFEE (CBOU): Free Stock Analysis
CHIPOTLE MEXICN (CMG): Free Stock Analysis
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