EMERYVILLE, Calif., Nov. 2 /PRNewswire-FirstCall/ -- Peet's Coffee
& Tea, Inc. (NASDAQ:PEET) today announced its third quarter
results for the period ended October 2, 2005, which included 13
weeks. In this release, the company: -- Reports net revenue growth
for the quarter of 24.3 percent, slightly higher than previous
guidance of 20 to 21 percent; -- Achieves earnings per share of
$0.15, at the high end of previous guidance of $0.14 to $0.15; --
Raises full year 2005 net revenue guidance to 22 percent growth or
about $175 million and confirms $0.74 in earnings per share; and --
Provides 2006 guidance of 20 to 23 percent sales growth and
operating margins in the 9 percent range. For the quarter ended
October 2, 2005, net revenue increased 24.3 percent to $42.9
million from $34.5 million for the corresponding period of fiscal
2004. For the quarter, net earnings increased 10.3 percent to $2.2
million from $2.0 million for the corresponding period last year.
Earnings per share were $0.15 compared to $0.14 per share for the
same period last year. Last year in the third quarter, net earnings
included a $0.5 million increase in income as a result of an
adjustment to a 2003 lawsuit settlement reserve, which increased
earnings per share by $.02. "We are pleased with the progress we
are making in executing our growth strategy, as indicated by our
results this quarter," said Patrick O'Dea, President and CEO of
Peet's Coffee & Tea, Inc. "Our retail and specialty businesses
both performed well, and we are on track to open 20 new Peet's
stores this year." Financial and Operating Summary Retail revenue
increased 20.1 percent to $28.7 million for the quarter ended
October 2, 2005, from $23.9 million for the corresponding period of
fiscal 2004. The increase was primarily attributable to new retail
stores opened in the last 12 months and secondarily to growth in
existing stores. The company opened 5 stores in the quarter.
Specialty revenue increased 34.0 percent to $14.1 million, compared
to $10.5 million last year. Within specialty sales, the grocery
business continues to grow the most rapidly, up 53.2 percent over
last year, with existing grocery customers accounting for the
majority of the increase. The food service business also grew
significantly at 35.6 percent, followed by the office business at
33.4 percent, both benefiting from new customers added in the last
12 months. Home delivery sales grew 10.6 percent. Cost of sales and
related occupancy costs decreased to 45.9 percent of total net
revenue compared to 46.8 percent last year. This decrease was
primarily driven by a price increase taken in the retail and home
delivery businesses in October of 2004. Operating expenses as a
percent of net revenue increased to 34.7 percent from last year's
34.5 percent. Retail operating expenses increased 1.8 percentage
points as a percent of retail revenue due to investments in
headcount and new store expansion, partially offset by the price
increase. Specialty operating expenses decreased 1.6 percentage
points as specialty sales grew on a relatively fixed cost
structure. Marketing and advertising expenses increased to $1.1
million, compared to $0.8 million last year. As a percent of total
net revenue, marketing expenses increased to 2.6 percent from 2.2
percent last year. Depreciation and amortization expenses increased
to $1.9 million, compared to $1.5 million last year. The increase
was primarily due to the opening of 18 new retail stores in the
last 12 months. As a percent of total net revenue, depreciation and
amortization expenses were equal to last year at 4.3 percent.
General and administrative expenses increased to $2.1 million
compared to $1.2 million last year primarily due to the $0.5
million litigation reserve reduction in the third quarter of 2004.
The remaining increase is due to costs associated to support the
growth of the business. As a percent of total net revenue, general
and administrative expenses increased to 5.0 percent from 3.5
percent last year due to the 1.6 percent impact of the litigation
reserve reduction. Income from operations increased to $3.2
million, or 7.5 percent of net revenue (or operating margin),
compared to $3.0 million, or 8.6 percent, last year. The company
ended the quarter with cash and cash equivalents plus marketable
securities of $65.4 million. Fiscal 2005 Targets Peet's also
reaffirmed its earnings guidance for the full year 2005 and raised
its sales guidance: -- For the 13 weeks ending January 1, 2006, the
company estimates sales to be up between 12 to 13 percent compared
to the 14 weeks ended January 2, 2005. On a 13 week to 13 week
comparative basis, sales are expected to grow approximately 19 to
20 percent. Earnings for the quarter are expected to be
approximately $0.24 per share. -- For the full year, Peet's is
forecasting total net revenue to grow approximately 22 percent,
excluding the impact of the 53rd week in fiscal 2004, resulting in
net revenue of approximately $175 million. Operating margin is
forecasted at slightly above 9 percent resulting in expected
earnings per share of $0.74. The company expects to open a total of
20 new stores in the fiscal year. Fiscal 2006 Outlook Looking
ahead, Peet's introduced the following fiscal 2006 guidance: --
Total revenues are expected to grow 20 to 23 percent. -- Excluding
any impact from expensing stock options, operating margins are
expected to be approximately 9 percent, which would result in
earnings per share between $.80 and $.83 on a diluted share base of
approximately 15 million shares. -- The company is planning to grow
its retail store base by 20 to 25 percent, or 23 to 28 new
locations. -- Finally, the company is targeting an effective tax
rate of slightly less than 40 percent, with quarterly variations.
"Two years ago, we set a target to be a 20 percent plus top-line
growth company on a sustainable basis," said Patrick O'Dea,
President and Chief Executive Officer. "In 2005, we expect to
achieve that target and we intend to continue it in 2006. As we've
consistently indicated over the past two years, we expect operating
margins to remain in the 9 percent range in 2006, though our bias
is to invest further in top-line growth initiatives should the
right opportunities arise. We remain focused on our vision to
strengthen Peet's position as the gold standard specialty coffee
and tea brand in the world and on executing against the enormous
long-term growth opportunity before us." Peet's Coffee & Tea,
Inc. Q3 2005 Conference Call The company will report its third
quarter 2005 earnings results via conference call on Wednesday,
November 2, 2005. The teleconference call will begin at 2 p.m. PT/5
p.m. ET. The teleconference can be accessed by calling
1-800-289-0494, using access code 6064330. The call will be
simultaneously Webcast with accompanying slides on Peet's Web site
at http://investor.peets.com/Medialist.cfm. A replay of the
teleconference will be available two hours after the end of the
call through midnight ET on November 9, 2005, at 1-888-203-1112 or
719-457-0820, using access code 6064330. It will also be archived
at http://investor.peets.com/Medialist.cfm through November 2,
2006. ABOUT PEET'S COFFEE & TEA, INC. Founded in Berkeley,
Calif. in 1966, Peet's Coffee & Tea, Inc. is a specialty coffee
roaster and marketer of fresh, deep-roasted whole bean coffee for
home and office enjoyment. Peet's fresh-roasted coffee,
hand-selected tea and related items are sold in several
distribution channels including grocery, home delivery, office and
food service accounts and company-owned stores throughout the
United States. Peet's is committed to strategically growing its
business and to maintaining a unique culture and focus on customer
satisfaction. For information about Peet's Coffee & Tea, Inc.,
visit http://www.peets.com/ or call 1-800-999-2132. Peet's Coffee
& Tea, Inc. shares are traded under the symbol PEET. This press
release contains statements that are not based on historical fact
and are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward
looking statements include statements relating to 2005 annual and
fourth quarter sales growth, earnings estimates, and new store
openings, and 2006 revenue, retail store growth, operating margin
and tax rate targets. Forward-looking statements are based on
management's beliefs as well as assumptions made by and information
currently available to management, including financial and
operational information and current competitive conditions. As a
result, these statements are subject to various risks and
uncertainties. The Company's actual results could differ materially
from those set forth in forward-looking statements depending on a
variety of factors including, but not limited to, the Company's
ability to implement its business strategy, attract and retain
customers, and obtain and expand its market presence in new
geographic regions; the availability and cost of high quality
Arabica coffee beans; consumers' tastes and preferences; and
competition in its market as well as other risk factors as
described more fully in the Company's filings with the Securities
and Exchange Commission, including its Annual Report on Form 10-K
for the year ended January 2, 2005. These factors may not be
exhaustive. The Company operates in a continually changing business
environment, and new risks emerge from time to time. Any
forward-looking statements speak only as of the date of this press
release. PEET'S COFFEE & TEA, INC. CONSOLIDATED STATEMENTS OF
INCOME (Unaudited, in thousands, except per share amounts) Thirteen
weeks ended Thirty-nine weeks ended October 2, September 26,
October 2, September 26, 2005 2004 2005 2004 Retail stores $28,719
$23,917 $84,577 $70,063 Specialty sales 14,135 10,549 39,988 30,550
Net revenue 42,854 34,466 124,565 100,613 Operating expenses: Cost
of sales and related occupancy expenses 19,671 16,143 56,568 46,355
Operating expenses 14,868 11,903 42,731 34,260 Marketing and
advertising expenses 1,103 762 2,675 2,613 Depreciation and
amortization expenses 1,864 1,487 5,365 4,166 General and
administrative expenses 2,122 1,221 6,432 4,724 Total operating
costs and expenses 39,628 31,516 113,771 92,118 Income from
operations 3,226 2,950 10,794 8,495 Investment income, net 421 227
1,176 655 Income before income taxes 3,647 3,177 11,970 9,150
Income tax provision 1,431 1,168 4,723 3,557 Net income $2,216
$2,009 $7,247 $5,593 Net income per share: Basic $0.16 $0.15 $0.53
$0.42 Diluted $0.15 $0.14 $0.50 $0.40 Shares used in calculation of
net income per share: Basic 13,949 13,420 13,754 13,269 Diluted
14,658 14,115 14,421 13,915 PEET'S COFFEE & TEA, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands, except share
amounts) October 2, January 2, 2005 2005 ASSETS Current assets Cash
and cash equivalents $13,900 $11,356 Short-term marketable
securities 49,750 -- Accounts receivable, net 4,928 4,136
Inventories 20,751 12,614 Deferred income taxes 1,434 1,403 Prepaid
expenses and other 4,715 2,280 Total current assets 95,478 31,789
Long-term marketable securities 1,767 52,057 Property and
equipment, net 44,996 40,588 Intangible and other assets, net 3,718
3,455 Total assets $145,959 $127,889 LIABILITIES AND SHAREHOLDERS'
EQUITY Current liabilities Accounts payable $5,307 $5,710 Accrued
compensation and benefits 6,116 4,266 Deferred revenue 2,259 2,394
Other accrued liabilities 2,673 3,372 Total current liabilities
16,355 15,742 Deferred income taxes 879 838 Deferred lease credits
and other long-term liabilities 2,401 2,182 Total liabilities
19,635 18,762 Shareholders' equity Common stock, no par value;
authorized 50,000,000 shares; issued and outstanding: 14,015,000
and 13,500,000 shares 102,979 93,091 Accumulated other
comprehensive loss, net of tax (90) (152) Retained earnings 23,435
16,188 Total shareholders' equity 126,324 109,127 Total liabilities
and shareholders' equity $145,959 $127,889 DATASOURCE: Peet's
Coffee & Tea, Inc. CONTACT: Media: Kelly Krueger of Weber
Shandwick, +1-415-248-3415 or , for Peet's Coffee & Tea, Inc.;
or Investors: Maria Butler-Hadas of Peet's Coffee & Tea, Inc.,
+1-510-594-2196 or Web site: http://www.peets.com/
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