Peet's Coffee & Tea, Inc. announced its first quarter results for the fiscal period ended April 3, 2011, which included 13 weeks.
For the 13 weeks ended April 3, 2011, net revenue increased 9 percent to $88.5 million from $81.2 million for the corresponding period of fiscal 2010.
Net income for the 13 weeks ended April 3, 2011, was $5.5 million compared to $3.1 million for the corresponding 13-week period of fiscal 2010. Diluted earnings per share was $0.41 for the 13-week period of fiscal 2011 compared to $0.22 per share for the corresponding period of fiscal 2010, an increase of 86 percent.
Last year's net income included $0.8 million ($0.5 million net of tax) of legal and related expenses the company incurred to comply with a subpoena it received from the Federal Trade Commission in connection with its anti-trust review of the proposed Green Mountain Coffee Roasters acquisition of Diedrich Coffee.
Excluding this unusual item from last year's results, diluted earnings per share increased 58 percent compared to non-GAAP diluted earnings per share of $0.26 for the corresponding period last year.
"We had a very good first quarter and the fundamentals of our business are strong," said Patrick O'Dea, president and CEO of Peet's Coffee & Tea in a prepared statement. "We experienced good sales growth across all channels, with our grocery business growing the strongest at 22 percent this quarter. With excellent overall cost management, we translated this into a record first quarter operating margin of 9.8 percent and EPS growth of 58 percent. Looking forward, we have good momentum and plenty of new growth opportunities. While we expect to offset most of the year-over-year coffee cost increase we're experiencing, we will continue to act in the long-term best interests of our business and not overreact to the recent run-up in world coffee prices."
Retail net revenue increased 4 percent to $52.1 million for the 13 weeks ended April 3, 2011, from $50.1 million for the corresponding period of fiscal 2010. The increase was solely attributable to sales growth in existing stores. The company ended the quarter with 193 stores, the same number of stores as the end of the first quarter in 2010.
Specialty net revenue increased 17 percent to $36.4 million for the 13 weeks ended April 3, 2011, compared to $31.1 million for the corresponding period of fiscal 2010. Within specialty, the grocery business grew 22 percent over last year; the foodservice and office business grew 11 percent; and home delivery net revenue grew 4 percent.
Cost of sales and related occupancy expenses were 46.6 percent of total net revenue, compared to 46.2 percent for the corresponding period last year. The increase resulted from higher coffee costs and a mix shift towards the specialty business, which has a higher cost of sales, offset by the impact of price increases across all channels.
Operating expenses as a percentage of net revenue decreased to 31.5 percent from 34.3 percent for the corresponding period last year due to a favorable mix shift to the specialty business, the impact of price increases across all channels, leveraging of retail overhead costs, and lower training expenses in retail stores.
In the corresponding period last year, the company incurred $0.8 million ($0.5 million net of tax) in legal and related fees to comply with a subpoena the company received from the Federal Trade Commission in connection with its anti-trust review of the proposed Green Mountain Coffee Roasters acquisition of Diedrich Coffee.
General and administrative expenses as a percentage of net revenue were 7.7 percent of net revenue, compared to 7.8 percent for the corresponding period last year. General and administrative expenses increased to $6.8 million, compared to $6.3 million for the corresponding period last year, primarily due to higher payroll-related costs and marketing expenses.
Depreciation and amortization expenses as a percentage of net revenue decreased to 4.4 percent of net sales compared to 4.8 percent for the corresponding period last year. Depreciation and amortization expenses were $3.9 million, consistent with the corresponding period last year.
