Peet's Coffee & Tea, Inc. (NASDAQ:PEET) today announced its
second quarter results for the period ended July 3, 2005, which
included 13 weeks. In this release, the company: -- Reports sales
growth for the quarter of 24.4 percent, slightly higher than
previous guidance of 21 to 22 percent; -- Reports earnings growth
of 46.6 percent; -- Achieves earnings per share of $0.18, exceeding
previous guidance of $0.15 to $0.16, primarily driven by a shift in
the timing of some expenses; and -- Confirms 2005 guidance of 20
percent sales growth and $0.74 per share. For the quarter ended
July 3, 2005, net revenue increased 24.4 percent to $41.7 million
from $33.6 million for the corresponding period of fiscal 2004. For
the quarter, net earnings increased 46.6 percent to $2.6 million
from $1.8 million for the corresponding period last year. Diluted
earnings per share were $0.18 compared to $0.13 per share for the
same period last year. "We are pleased with the progress we are
making in executing our growth strategy, as indicated by our
results this quarter and our first half sales growth of 23.5
percent," said Patrick O'Dea, President and CEO of Peet's Coffee
& Tea, Inc. "While we expect our growth rate in the third and
fourth quarters to come down a bit due to the timing of new store
openings this year versus last, we remain on target to deliver our
original guidance for the year." Financial and Operating Summary
Retail revenue increased 21.9 percent to $28.6 million for the
quarter ended July 3, 2005, from $23.4 million for the
corresponding period of fiscal 2004. The increase was primarily
attributable to new retail stores opened in the last 12 months and
secondarily to growth in existing stores. Specialty revenue
increased 30.2 percent to $13.1 million, compared to $10.1 million
last year. Within specialty sales, the grocery business continues
to grow the most rapidly, up 47.1 percent over last year, with
existing grocery customers accounting for over half of the
increase. The food service business also grew significantly at 33.9
percent, benefiting from new customers added in the last 12 months.
Home delivery sales grew 10.9 percent, and the office business grew
30.6 percent. Cost of sales and related occupancy costs decreased
to 45.1 percent of total net revenue compared to 45.8 percent last
year. This decrease was primarily driven by a price increase taken
in the retail and home delivery businesses last October. Operating
expenses as a percent of net revenue increased to 34.4 percent from
last year's 33.8 percent. This consists of a 3 percentage point
increase in retail operating expenses as a percent of retail
revenue due to new store expansion, partially offset by a 4.1
percentage point improvement in specialty operating expenses as
specialty sales grew on a relatively fixed cost structure.
Marketing and advertising expenses decreased to $0.7 million,
compared to $1.0 million last year. As a percent of total net
revenue, marketing expenses decreased to 1.8 percent from 2.9
percent last year. The decrease was primarily due to the timing of
current year spending. Depreciation and amortization expenses
increased to $1.8 million, compared to $1.4 million last year. The
increase was primarily due to the opening of 18 new retail stores
in the last 12 months. As a percent of total net revenue,
depreciation and amortization expenses increased to 4.4 percent
from 4.1 percent last year primarily due to the new stores. General
and administrative expenses increased to $2.1 million compared to
$1.8 million last year primarily due to costs associated to support
the growth of the business. As a percent of total net revenue,
general and administrative expenses decreased to 5.1 percent from
5.3 percent last year. The company ended the quarter with cash and
cash equivalents plus marketable securities of $62.1 million.
Fiscal 2005 Targets Looking ahead, Peet's provides an update on
fiscal 2005 targets: -- In the third quarter of 2005, the company
is forecasting sales to grow approximately 20 percent with earnings
per share between $0.14 and $0.15, and -- For the full year, Peet's
is targeting total net revenue to grow between 20 and 21 percent,
excluding the impact of the 53rd week in fiscal 2004, resulting in
net revenue of approximately $173 million and earnings per share of
$0.74. Peet's Coffee & Tea, Inc. Q2 2005 Conference Call The
company will report its second quarter 2005 earnings results via
conference call on Wednesday, August 3, 2005. The teleconference
call will begin at 2 p.m. PT/5p.m. ET. The teleconference can be
accessed by calling 1-800-289-0544, using access code 6943667. The
call will be simultaneously Webcast with accompanying slides on
Peet's Web site at http://investor.peets.com/Medialist.cfm. A
replay of the teleconference will be available two hours after the
end of the call through midnight ET on August 10, 2005, at
1-888-203-1112 or 719-457-0820, using access code 6943667. It will
also be archived at http://investor.peets.com/Medialist.cfm through
August 3, 2006. ABOUT PEET'S COFFEE & TEA, INC. Founded in
Berkeley, Calif. in 1966, Peet's Coffee & Tea, Inc. is a
specialty coffee roaster and marketer of fresh, deep-roasted whole
bean coffee for home and office enjoyment. Peet's fresh-roasted
coffee, hand-selected tea and related items are sold in several
distribution channels including grocery, home delivery, office and
food service accounts and company-owned stores throughout the
United States. Peet's is committed to strategically growing its
business and to maintaining a unique culture and focus on customer
satisfaction. For information about Peet's Coffee & Tea, Inc.,
visit www.peets.com or call 1-800-999-2132. Peet's Coffee &
Tea, Inc. shares are traded under the symbol PEET. This press
release contains statements that are not based on historical fact
and are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward
looking statements include statements relating to 2005 annual and
third quarter sales growth and earnings estimates. Forward-looking
statements are based on management's beliefs as well as assumptions
made by and information currently available to management,
including financial and operational information and current
competitive conditions. As a result, these statements are subject
to various risks and uncertainties. The Company's actual results
could differ materially from those set forth in forward-looking
statements depending on a variety of factors including, but not
limited to, the Company's ability to implement its business
strategy, attract and retain customers, and obtain and expand its
market presence in new geographic regions; the availability and
cost of high quality Arabica coffee beans; consumers' tastes and
preferences; and competition in its market as well as other risk
factors as described more fully in the Company's filings with the
Securities and Exchange Commission, including its Annual Report on
Form 10-K for the year ended January 2, 2005. These factors may not
be exhaustive. The Company operates in a continually changing
business environment, and new risks emerge from time to time. Any
forward-looking statements speak only as of the date of this press
release. -0- *T PEET'S COFFEE & TEA, INC. CONSOLIDATED
STATEMENTS OF INCOME (Unaudited, in thousands, except per share
amounts) Thirteen weeks Twenty-six weeks ended ended July 3, June
27, July 3, June 27, 2005 2004 2005 2004 -------- -------- --------
-------- Retail stores $28,575 $23,449 $55,858 $46,146 Specialty
sales 13,148 10,102 25,853 20,001 -------- -------- --------
-------- Net revenue 41,723 33,551 81,711 66,147 Operating
expenses: Cost of sales and related occupancy expenses 18,826
15,359 36,897 30,213 Operating expenses 14,362 11,354 27,863 22,357
Marketing and advertising expenses 741 975 1,572 1,851 Depreciation
and amortization expenses 1,821 1,360 3,501 2,679 General and
administrative expenses 2,116 1,786 4,310 3,503 -------- --------
-------- -------- Total operating costs and expenses 37,866 30,834
74,143 60,603 -------- -------- -------- -------- Income from
operations 3,857 2,717 7,568 5,544 Investment income, net 427 241
755 428 -------- -------- -------- -------- Income before income
taxes 4,284 2,958 8,323 5,972 Income tax provision 1,681 1,183
3,292 2,388 -------- -------- -------- -------- Net income $2,603
$1,775 $5,031 $3,584 ======== ======== ======== ======== Net income
per share: Basic $0.19 $0.13 $0.37 $0.27 Diluted $0.18 $0.13 $0.35
$0.26 Shares used in calculation of net income per share: Basic
13,748 13,288 13,656 13,194 Diluted 14,424 14,013 14,297 13,813
PEET'S COFFEE & TEA, INC. CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share amounts) July 3, Jan. 2,
2005 2005 --------- --------- ASSETS Current assets Cash and cash
equivalents $9,701 $11,356 Accounts receivable, net 3,782 4,136
Inventories 18,403 12,614 Deferred income taxes 1,419 1,403 Prepaid
expenses and other 4,521 2,280 --------- --------- Total current
assets 37,826 31,789 Marketable securities 52,363 52,057 Property
and equipment, net 42,869 40,588 Intangible and other assets, net
3,650 3,455 --------- --------- Total assets $136,708 $127,889
========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities Accounts payable $3,098 $5,710 Accrued compensation and
benefits 4,583 4,266 Deferred revenue 2,233 2,394 Other accrued
liabilities 2,060 3,372 --------- --------- Total current
liabilities 11,974 15,742 Deferred income taxes 851 838 Deferred
lease credits and other long-term liabilities 2,329 2,182 ---------
--------- Total liabilities 15,154 18,762 Shareholders' equity
Common stock, no par value; authorized 50,000,000 shares; issued
and outstanding: 13,898,000 and 13,500,000 shares 100,465 93,091
Accumulated other comprehensive loss, net of tax (130) (152)
Retained earnings 21,219 16,188 --------- --------- Total
shareholders' equity 121,554 109,127 --------- --------- Total
liabilities and shareholders' equity $136,708 $127,889 =========
========= *T
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