Peet's Coffee & Tea, Inc. announced its fourth quarter and full-year results for the period ended Jan. 1, 2012.
For the 13 weeks and 52 weeks ended January 1, 2012, net revenue increased 11 percent versus the corresponding periods of fiscal 2010.
Diluted earnings per share was $1.33 for fiscal 2011, compared to $1.28 for fiscal 2010. Excluding the litigation- and transaction-related items outlined below, non-GAAP diluted earnings per share increased 12 percent to $1.49 for fiscal 2011, compared to $1.33 for fiscal 2010.
"Despite record high coffee costs since becoming a public company, we finished fiscal 2011 with diluted earnings per share toward the higher end of our stated range, consistent with previous guidance," said Patrick O'Dea, president and CEO of Peet's Coffee & Tea in a prepared statement. "Our sales growth continues to be strong, led by our grocery business, which grew 29 percent in the quarter and 30 percent for the year. Our performance in 2011 is a testament to our brand's premium-quality, premium-priced position in the market and the strength of our team. With pricing in place, visibility to our 2012 coffee costs, and already established growth strategies underway, we are well positioned to achieve our goals for this year. I believe this, in combination with the many new growth opportunities in our pipeline, bodes well for our long-term growth prospects."
Net income and diluted earnings per share for fiscal 2011 include $3.3 million ($0.16 per diluted share) of expenses associated with a class action lawsuit, including anticipated settlement and legal costs. These costs are reflected in the consolidated statements of income as litigation-related expenses.
Net income and diluted earnings per share for fiscal 2010 include $1.0 million ($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. These costs are reflected in the consolidated statements of income as Transaction-related expenses.
Fourth quarter retail net revenue increased 3 percent to $56.5 million for the 13 weeks ended Jan. 1, 2012, from $54.7 million for the corresponding period last year. The increase was driven by a 6 percent rise in sales of beverages and pastries. The company opened two stores in the quarter, ending the year with 196 stores versus 192 stores at the end of fiscal 2010.
Specialty net revenue increased 22 percent to $45.1 million for the 13 weeks ended January 1, 2012, compared to $36.9 million for the corresponding period last year. Within specialty, grocery sales were up 29 percent over last year, foodservice and office sales grew 20 percent, and home delivery sales were flat.
Cost of sales and related occupancy expenses increased as a percent of total net revenue to 52.7 percent for the quarter, compared to 45.7 percent for the corresponding period last year. The increase resulted primarily from higher coffee costs and, to a lesser extent, higher milk costs and a mix shift towards the specialty business, which has a higher cost of sales. Price increases across the channels and lower shipping expenses partially offset the impact of these higher costs.
Operating expenses decreased as a percentage of net revenue to 28.2 percent, compared to 30.9 percent for the corresponding period last year. The decrease was due to a favorable mix shift towards the specialty business, the impact of price increases across all channels, leveraging of overhead expenses, and cost efficiencies in both our retail stores and our direct store delivery system.
General and administrative expenses decreased as a percentage of net revenue to 6.7 percent, compared to 8.0 percent for the corresponding period last year. General and administrative expenses decreased to $6.8 million from $7.3 million for the corresponding period last year, primarily due to lower payroll costs and outside services.