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Caribou Coffee Company Inc. Reports Operating Results (10-Q)

November 06, 2009 | About:
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10qk

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Caribou Coffee Company Inc. (CBOU) filed Quarterly Report for the period ended 2009-09-27.

Caribou Coffee is the second largest company-owned gourmet coffeehouse operator in the United States based on the number of coffeehouses. It offers its customers high-quality gourmet coffee and espresso-based beverages as well as specialty teas baked goods whole bean coffee branded merchandise and related products. In addition it sells products to grocery stores and mass merchandisers office coffee providers airlines hotels sports and entertainment venues college campuses and other commercial customers. It also focuses on creating a unique experience for customers through a combination of high-quality products a comfortable and welcoming coffeehouse environment and customer service. Caribou Coffee Company Inc. has a market cap of $168.7 million; its shares were traded at around $8.71 with a P/E ratio of 145.2 and P/S ratio of 0.6.

Highlight of Business Operations:

Total net sales increased $1.8 million, or 3.0%, to $62.7 million in the third thirteen weeks of 2009 from $60.9 million in the third thirteen weeks of 2008. This increase was attributable to a sales increase in the commercial segment partially offset by a 0.5% decrease of comparable coffeehouse sales and a slight decrease in franchise segment sales. Coffeehouse net sales decreased $0.2 million, or 0.5%, to $54.5 million in the third thirteen weeks of 2009 from $54.7 million in the third thirteen weeks of 2008. Commercial and franchise sales increased by $2.1 million, or 33.7%, to $8.3 million for the third thirteen weeks of 2009 from $6.2 million for the third thirteen weeks

Depreciation and amortization. Depreciation and amortization decreased $6.7 million, or 66.1%, to $3.5 million in the third thirteen weeks of 2009, from $10.2 million in the third thirteen weeks of 2008. As a percentage of total net sales, depreciation and amortization was 5.5% in the third thirteen weeks of 2009, compared to 16.8% in the third thirteen weeks of 2008. This decrease is due to the impairment of company-owned coffeehouses during 2008. Depreciation and amortization in the third thirteen weeks of 2008 includes $5.7 million in accelerated depreciation associated with coffeehouse impairments.

Coffeehouse sales decreased $0.2 million, or 0.5%, to $54.5 million in the third thirteen weeks of 2009 from $54.7 million in the third thirteen weeks of 2008. This decrease is attributable to a 0.5% decrease in comparable coffeehouse net sales in the third thirteen weeks of 2009 as compared to the same period in 2008.

Depreciation and amortization. Depreciation and amortization decreased $6.7 million, or 66.1%, to $3.5 million for the third thirteen weeks of 2009, from $10.2 million for the third thirteen weeks of 2008. This decrease is due to the impairment of company-owned coffeehouses during 2008. Depreciation and amortization includes $5.7 million in accelerated depreciation associated with coffeehouse impairments in the third thirteen weeks of 2008.

Closing expense and disposal of assets. Closing expense and disposal of assets decreased $0.5 million to $0.1 million for the third thirteen weeks of 2009 from $0.6 million for the third thirteen weeks of 2008. The decrease in closing expense and disposal of assets is primarily attributable to asset write-offs and lease termination costs associated with the closing of two underperforming company-owned coffeehouses in the third thirteen weeks of 2008. There was one company-owned coffeehouse closure in the third thirteen weeks of fiscal 2009. We will continue to actively manage our portfolio of company-owned coffeehouses. Expenses associated with the closings are variable from coffeehouse to coffeehouse and are dependent upon the amount of time left on the lease and the remaining book value of assets associated with each coffeehouse.

Cost of sales and related occupancy costs. Cost of sales and related occupancy costs decreased $0.1 million, or 7.7%, to $1.0 million for the third thirteen weeks of 2009, from $1.1 million for the third thirteen weeks of 2008. The decrease was primarily due to lower product sales to our franchised coffeehouses during the third thirteen weeks of 2009. As a percentage of sales, cost of sales and related occupancy costs decreased to 57.1% for the third thirteen weeks of 2009, from 61.6% for the third thirteen weeks of 2008. The decrease in cost of sales and related occupancy costs as a percentage of sales was primarily due to a change in revenue mix in the franchise segment.

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