Caribou Coffee Company, Inc. (CBOU), posted fourth-quarter 2010 earnings of 21 cents per share, in line with the Zacks Consensus Estimate. The fourth quarter earnings soared 40% from 15 cents reported in the prior-year quarter.
Caribou Coffee Company’s net sales for the quarter climbed only 1.9% to $77.9 million, due to an additional week in the fourth quarter of 2009.
The company’s full-year earnings per share were 46 cents versus 26 cents in full fiscal 2009. Net Sales were $284.0 million in full fiscal 2010, representing a year-over-year growth of 8.2%.
Performance Highlights
Segment wise, Coffeehouse sales dropped 3.8% year over year to $62.1 million during the quarter; however comparable coffeehouse sales jumped 3.5%. Commercial sales leaped 36.8% to $13.1 million, driven by higher sales to existing and new customers, while revenues from Franchise spiked 17.4% to $2.7 million. However, on a comparative 13- week basis the results were strong across all three lines of business.
Cost of sales and related occupancy cost increased 5.8% to $36.4 million in the fourth quarter of 2010, driven by sales increase in the quarter; where as general and administrative expense increased 4.6% to $7.8 million due to the addition of some key managers. However, operating expense dipped 7.7% to $26.0 million attributable to lower marketing spending.
Total operating income surged 51.0% to $4.6 million and operating margins were up 170 basis points (bp) to 5.7% as operating cost based on revenue dropped 350 bps attributed to operating efficiencies. Additionally, depreciation and amortization expenses also declined 40 bps to 3.9% as capital spending was lower than the year-ago quarter.
Store Update
During the quarter, Caribou Coffee opened 7 and closed 2 franchised coffeehouses. At the end of the year, there were 410 company-owned and 131 franchised coffeehouses.
Financial Position
Caribou Coffee ended the year with cash and cash equivalents of $23.1 million, no long term debt and shareholders equity of $62.3 million.
Outlook
In 2011, Minneapolis, Minnesota– based company expects net sales growth of 7% to 9% and earnings in the range of 58 cents to 62 cents on a pre tax basis.
Our Take
We expect estimates to move up for fiscal 2011 and 2012 as the company reported better results, excluding the impact of additional week in the fourth quarter and fiscal 2009. The Zacks Consensus Estimate for 2011 is 60 cents and 47 cents for 2012.
One of Caribou Coffee Company’s primary competitors, Einstein Noah Restaurant Group, Inc. (BAGL) has postponed its earnings release date for the fourth quarter and fiscal 2010.
EINSTEIN NOAH (BAGL): Free Stock Analysis Report
CARIBOU COFFEE (CBOU): Free Stock Analysis Report
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