HIGHLIGHTS FOR THE FIRST QUARTER OF 2009 INCLUDE:
• Net income of $0.3 million or $0.02 per share and EBITDA of $4.6 million for the quarter.
• Commercial sales increased 61 percent while franchise sales increased 14 percent compared to first quarter 2008.
Michael Tattersfield, the company’s president and CEO says, "I am pleased with the progress we continue to make in improving profitability. We have communicated that the turnaround will be a multi-year effort, and although we are operating in a challenging economic environment, we are continuing to see progress. We are accomplishing this by focusing on key strategic initiatives; improving our guest experience, strengthening our brands and focusing on the expansion of our franchise and commercial channels.”
Mr. Tattersfield adds, “Non-coffeehouse sales continue to exhibit strong growth and have helped to offset the past emphasis on company-owned coffeehouse expansion, reinforcing our stated goal of evolving to a branded coffee company.”
FIRST QUARTER 2009 RESULTS
Total net sales were $60.4 million for the quarter ended March 29, 2009, a decrease of $1.4 million or 2.2 percent from $61.8 million for the quarter ended March 30, 2008. This decrease is attributable to 204 fewer operating coffeehouse weeks due to coffeehouse closures in 2008, a 5.0 percent decrease in comparable coffeehouse sales in the first quarter of 2009 compared to the same period in 2008, partially offset by commercial and franchise segment sales growth.
Coffeehouse sales were $52.9 million in the first quarter of 2009, a decrease of 6.6 percent from the same period in the prior year. The decrease primarily reflects the 5.0 percent decline in comparable coffeehouse sales and fewer coffeehouse operating weeks. No new company-owned coffeehouses opened during the quarter. Commercial sales were $5.7 million in the first quarter of 2009, an increase of 60.6 percent over the first quarter of 2008. The increase was due to higher sales from existing and new commercial customers, as the company opened 711 new doors. Franchise sales were $1.8 million in the first quarter of 2009, an increase of 14.2 percent over the first quarter of 2008. The increase was due to higher sales from franchise fees, royalties and product sales from 38 franchise coffeehouses opened during the last 12 months, including 6 coffeehouse openings during the first quarter of 2009.
Cost of sales and related occupancy costs in the first quarter of 2009 was $26.3 million and remained relatively flat for the quarter compared to the same period of the prior year.
Operating expenses in the first quarter of 2009 were $23.3 million compared to $25.4 million in the same period of the prior year. This decrease was the result of improved operating performance within the retail segment as well as having fewer coffeehouse operating weeks. As a percentage of revenue, operating costs were 38.6 percent, down from 41.1 percent in the same period of the prior year.
General and administrative expenses decreased $0.9 million, or 11.3 percent, to $6.6 million during the thirteen weeks ended March 29, 2009, from $7.5 million during the thirteen weeks ended March 30, 2008. The decrease in general and administrative expenses was the result of cost reduction actions taken during fiscal 2008 and the on-going focus on overall cost management.
Store closing expense and disposal of assets decreased $2.4 million to $0.1 million during first quarter 2009, from $2.5 million during first quarter 2008. The decrease in closing expense and disposal of assets is primarily attributable to asset write-off and lease termination costs associated with the closing of 16 underperforming company-owned coffeehouses during the thirteen weeks ended March 30, 2008. There were no company –owned stores closed in the first quarter of 2009.
EBITDA was $4.6 million during the thirteen weeks ended March 29, 2009, compared to EBITDA of $0.5 million during the thirteen weeks ended March 30, 2008. The year over year EBITDA increase was primarily due to improved performance within our retail coffeehouses, continued growth in the commercial and franchise segments, operating cost reductions and lower retail coffeehouse closing expenses. (EBITDA is a non-GAAP measure. See EBITDA reconciliation at the end of this release).
Depreciation and amortization decreased $2.2 million, or 36.8 percent, to $3.7 million during the thirteen weeks ended March 29, 2009, from $5.9 million during the same period in the prior year. The decrease was due to $1.5 million in accelerated deprecation associated with company-owned coffeehouses during the first quarter 2008 and lower depreciable assets during 2009 from impairments taken in the past year.
The company’s net income for the first quarter of 2009 was $0.3 million or $0.02 per share compared to a net loss of $6.4 million or ($0.33) per share for the same period in 2008.