Edit Symbol List
Enter up to 25 symbols separated by commas or spaces in the text box below. These symbols will be available during your session for use on applicable pages.
Don't know the stock symbol? Use the symbol lookup tool.
Alphabetize the sort order of my symbols
Caribou Coffee Company Inc. (CBOU)
Q4 2007 Earnings Call
February 14, 2008 4:30 pm ET
Kathleen Heaney - Integrated Corporate Relations
Roz Mallet - Chief Executive Officer and President
Kaye O'Leary - Chief Financial Officer
Chris O'Cull - SunTrust Robinson Humphrey
Colin Guheen - Cowen & Co.
Welcome to the Caribou Coffee Company, Inc.'s Fourth Quarter 2007 Earnings Results Conference Call. (Operator Instructions).
I would now like to turn the conference over to Ms. Kathleen Heaney of Integrated Corporate Relations. Please go ahead, ma'am.
» American Greetings Corporation F3Q10 (Qtr End 11/27/09) Earnings Call Transcript
» The Finish Line, Inc. F3Q10 (Qtr End 11/28/09) Earnings Call Transcript
Making presentations during the call today with be Roz Mallet, Chief Executive Officer and President and Kaye O'Leary, Chief Financial Officer.
Before we get into a discussion of the fourth quarter results, I need to read the Safe Harbor statement.
Part of our discussion today may include forward-looking statements. These statements are not guarantees of future performance and therefore undue reliance should not be put upon them. The company undertakes no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this conference call.
We refer all of you to Caribou Coffee's most recent filings with the SEC for a more detailed discussion of the risks that could impact future operating results and financial conditions. During this call, management will discuss financial terms such as EBITDA, which is a non-GAAP measure. While this is a non-GAAP measure of financial performance, we believe it is a common and useful tool in evaluating the company's performance. A reconciliation to comparable GAAP measures can be found on the last page of today's press release, as well as on the website in the Investor Relations section.
With that, I would like to turn the call over to Roz Mallet.
Thank you, Kathleen. Good afternoon, everyone, and thank you for joining us today for the Caribou Coffee fourth quarter 2007 Earnings Call. It is my pleasure to be speaking with everyone today and I look forward to continuing the dialog as the year progresses.
2007 was a year of transition for Caribou. It was a year in which we took the necessary and sometimes difficult actions to position Caribou Coffee for profitable growth. We accelerated coffeehouse closings, which hurt our profitability, but ultimately leads to a healthier store base.
As previously discussed, we have slowed company-owned coffeehouse expansions, opening 9 in the fourth quarter for a total of 20 company-owned coffeehouse openings for the year. By contrast, we have accelerated franchised coffeehouse development. During the fourth quarter, we opened 11 franchised coffeehouses for a total of 28 franchised coffeehouse openings for the full year. We now have 52 franchised coffeehouses, up from 24 at the end of the fourth quarter 2006.
For 2008, we expect total new coffeehouse openings to be in the range of 35 to 50, of which the majority will be franchised. As we opened company-owned coffeehouses in the near term, we will focus on building out our existing market. Also for the past year, we have reexamined our site collection criteria. We have applied some of what we have learned about site model criteria to our existing site portfolio as well as to closing store decisions. For example, one of the key learnings from our study was how critically important easy access to the coffeehouse is for morning commuters.
During the fourth quarter, we closed nine coffeehouses for a total of 28 for the full year. As a review of the portfolio, we have made the tough decision to exit some smaller markets, where we were unable to dedicate the resources, both human and capital, necessary to get the stores to a level of performance that made economic sense. Along with aggressively managing the store portfolio, we are undertaking efforts to improve margins. To do this, we are implementing programs for food costs management and best practices on labor costs management.
We have also begun working with the consulting firm on operational engineering initiative. Additionally, we have many initiatives underway designed to boost average unit volumes. Also during the fourth quarter, we expanded the Caribou coffee brand through company-owned and franchised coffeehouses as well as commercial business and brand licensing channel.
As a result, total net sales in the quarter, were up about 5%. These included a significant increase in other sales, which rose 84% year-over-year. The hard work over the past year is beginning to show positive results and we are making progress. As previously announced, same-store sales were flat during the quarter and for the year as a whole, despite overall weakness in consumer spending patterns, I am particularly pleased with this performance based on the macroeconomic issues we were all facing.
As many of you know, our commercial business includes sales of prepackaged whole bean and ground coffee to trade channels such as conventional grocery, mass merchandisers and club stores. Not only are we adding new clients, we are also successfully broadening our geographic reach. During the fourth quarter, we added 115 store grocery chain in St. Louis, which will carry 10 SKUs of both whole bean and ground coffee.
On the brand licensing side, our agreement with Keurig is particularly noteworthy with a robust demand across many retail channels. Our franchise program has evolved in a different direction than we had originally planned, but a direction in which we are quite pleased.