Peet's Coffee & Tea, Inc. announced its fourth quarter and annual results for the fiscal year ended Jan. 2, 2011, which included 13 weeks and 52 weeks, respectively. The fiscal fourth quarter and fiscal year ended January 3, 2010, included 14 weeks and 53 weeks, respectively.
For the 13 weeks ended January 2, 2011, net revenue was approximately the same as the corresponding 14-week period of fiscal 2009. For the 52 weeks ended Jan. 2, 2011, net revenue increased 7 percent from fiscal 2009, which included 53 weeks. Excluding the impact of the 53rd week in 2009, the company would have reported sales growth of 6 percent and 9 percent for the quarter and the year on a comparable 13-week and 52-week basis, respectively.
Diluted earnings per share was $1.28 for fiscal 2010, compared to $1.44 per share for fiscal 2009. Excluding the items outlined below, non-GAAP diluted earnings per share increased 28 percent to $1.33 for 2010, compared to $1.04 per share for fiscal 2009.
"I'm pleased with the results we achieved in 2010, and I'm excited about the many opportunities ahead of us," said Patrick O'Dea, president and chief executive officer of Peet's Coffee & Tea, Inc. in a prepared statement. "This past year we delivered impressive operating margin improvement, strong earnings per share, and increased sales in line with our target, led by 24 percent growth in our consumer packaged grocery business. We believe the opportunities for continued strong sales and profit growth over the long term are rich and varied, both on our existing business and as we expand the Peet's brand into new geographies, to new customers, and with new product offerings."
Fiscal year net income and diluted earnings per share for 2010 include $1.0 million pre-tax ($0.05 per diluted share) of legal and related expenses incurred by the company for its response to the subpoena it received from the Federal Trade Commission (FTC) in connection with the FTC's anti-trust review of the acquisition of Diedrich Coffee by Green Mountain Coffee Roasters.
In the fourth quarter of fiscal 2009, the company recognized $5.6 million in net revenue during the 53rd week of the fiscal year.
Fourth quarter and fiscal year 2009 net income and diluted earnings per share included a pre-tax benefit of $8.6 million ($5.3 million after tax or $0.40 per diluted share) comprised of unusual items including:
• Net gain received from the company's attempted acquisition of Diedrich Coffee ($7.2 million after tax);
• Estimated settlement and legal costs of a class action lawsuit ($1.8 million after tax);
• Costs related to closing 4 stores during the quarter ($0.7 million after tax);
• Net income from the 53rd week of operation ($0.7 million after tax).
Retail net revenue decreased to $54.7 million for the 13 weeks ended Jan. 2, 2011, from $56.5 million for the corresponding 14-week period of fiscal 2009. Excluding the impact of the extra week in 2009, retail net revenue increased 4 percent from $52.8 million. The increase was solely attributed to sales growth in existing stores.
Specialty net revenue increased 5 percent to $36.9 million for the 13 weeks ended Jan. 2, 2011, compared to $35.2 million for the corresponding 14-week period of fiscal 2009. Excluding the impact of the extra week in 2009, total specialty net revenue increased 11 percent. Within specialty, the grocery business was up 4 percent over last year (11 percent on a comparable 13-week basis); foodservice and office business grew 9 percent (15 percent on a comparable 13-week basis); and home delivery sales were down 1 percent (up 3 percent on a comparable 13-week basis).
Cost of sales and related occupancy expenses were 45.7 percent of total net revenue for the 13 weeks ended Jan. 2, 2011, compared to 46.9 percent for the corresponding 14-week period of fiscal 2009. The decrease was driven by a favorable pricing impact in retail and lower operating costs at the roasting facility as a percentage of sales.
Operating expenses as a percentage of net revenue decreased to 30.9 percent for the 13 weeks ended Jan. 2, 2011, from 32.6 percent for the corresponding period of fiscal 2009, primarily due to the store closure costs in fiscal 2009 and leverage of retail overhead costs.
Transaction income in 2009 includes the $8.5 million break-up fee received for the termination of a definitive agreement for Peet's to acquire Diedrich Coffee, net of $4.2 million of costs incurred related to the transaction.
Litigation related expenses of $2.8 million in 2009 includes costs incurred related to the settlement of a wage and hour class action lawsuit that was filed in July 2008 against the company.
General and administrative expenses increased to $7.3 million for the 13 weeks ended Jan. 2, 2011, compared to $7.0 million for the corresponding period of fiscal 2009 primarily due to higher payroll and marketing costs, partially offset by the costs of the 53rd week of operations in 2009.
Depreciation and amortization expenses decreased to $3.9 million for the 13 weeks ended Jan. 2, 2011, compared to $4.0 million for the corresponding 14-week period of fiscal 2009.
The company ended 2010 with cash and cash equivalents plus investments of $49 million, compared to $48 million at year end 2009.
