EMERYVILLE, Calif., May 2 /PRNewswire-FirstCall/ -- Peet's Coffee
& Tea, Inc. (NASDAQ:PEET) today announced its first quarter
2006 results for the period ended April 2, 2006, which included 13
weeks. In this release, the company: -- Reports sales growth for
the quarter of 24.3 percent; -- Reports earnings per share of $0.16
and net income of $2.3 million, which includes stock-based
compensation expense recognized under SFAS 123(R), Share-Based
Payment, of $0.05 per share; -- Reports that non-GAAP net income,
excluding the impact of SFAS 123(R), increased 22.9 percent to $3.0
million or $0.21 per share; -- Provides 2006 guidance of 20 to 23
percent sales growth and $0.62 to $0.65 earnings per share, which
includes stock-based compensation expense of $0.19 to $0.21; and --
Confirms that it expects to open 23 to 28 new stores during the
year. For the 13 weeks ended April 2, 2006, net revenue increased
24.3 percent to $49.7 million from $40.0 million for the
corresponding period of fiscal 2005. Reported earnings for the
quarter, including accounting for stock options, were $2.3 million
or $0.16 per share, compared to $2.4 million or $0.17 per share
last year. The impact of adopting SFAS 123(R) in the first quarter
of 2006 lowered net income by $0.7 million, or $.05 per share. A
reconciliation to net income is attached to this release. "We are
very pleased with our results in the first quarter," said Patrick
O'Dea, president and chief executive officer of Peet's Coffee &
Tea, Inc. "Our consistently strong sales and profit performance
enables us to continue to invest for the long-term to build a great
company. Last week, we officially broke ground on our new roasting
facility that will increase our capacity substantially as we
continue to grow in the western United States. This is one of many
investments we are making to be sure that we can continue to build
our business while offering our customers coffee and teas of
uncompromising quality." Financial and Operating Summary Retail
revenue increased 22.4 percent to $33.4 million for the 13 weeks
ended April 2, 2006, from $27.3 million for the corresponding
period of fiscal 2005. The increase was primarily attributable to
new retail stores opened in the last 12 months and growth in our
existing stores. The company opened 2 new retail locations in the
quarter. Specialty revenue increased 28.4 percent to $16.3 million,
compared to $12.7 million for the corresponding quarter last year.
Within specialty sales, the grocery business continues to grow the
most rapidly, up 48.3 percent over last year. At the end of the
quarter, Peet's was in more than 4,000 grocery stores, or
approximately 500 more than the same period last year. The home
delivery business also registered a 12.9 percent growth, and the
foodservice and office business grew 11.5 percent during the
quarter compared to the same period last year. Cost of sales and
related occupancy costs increased to 45.3 percent of total net
revenue compared to 45.2 percent for the corresponding quarter last
year. The increase over last year is due to higher green coffee
costs and the expensing of stock options, partially offset by a
grocery pricing increase in October 2005. Operating expenses as a
percentage of net revenue increased to 35.0 percent compared to
33.8 percent for the corresponding quarter last year. The increase
was driven by the expensing of stock options in 2006 (0.7
percentage points), higher retail operating expenses due to new
stores opened in the last 12 months and higher operating costs to
support existing stores. Depreciation and amortization expenses
increased to $2.0 million, compared to $1.7 million for the
corresponding quarter last year. The increase was primarily due to
the opening of 18 new retail stores in the last 12 months. As a
percentage of total net revenue, depreciation and amortization
expenses decreased to 4.0 percent from 4.2 percent last year.
General and administrative expenses increased to $3.6 million
compared to $2.2 million for the same period last year primarily
due to costs associated to support acceleration of the growth of
the business and $0.5 million of stock option expense in 2006. The
company ended the quarter with cash and cash equivalents plus
investments of $69.6 million. Fiscal 2006 Targets Looking ahead,
Peet's provided additional detail on current fiscal 2006 targets:
-- In the second quarter of 2006, the company is forecasting sales
to grow approximately 20 percent with earnings per share between
$0.12 and $0.13. This includes a $0.05 per share impact of
expensing stock options. -- For the full year, Peet's is targeting
total net revenue to grow approximately 20 to 23 percent and
earnings per share of $0.62 to $0.65, which includes a $0.19 to
$0.21 per share impact of expensing stock options. Peet's Coffee
& Tea, Inc. Q1 2006 Conference Call The company will report its
first quarter 2006 earnings results via conference call on Tuesday,
May 2, 2006. The teleconference call will begin at 2 p.m. PT/5 p.m.
ET. The teleconference can be accessed by calling 1-800-289-0494,
confirmation code 2419072. The call will be simultaneously Webcast
on Peet's Web site at http://investor.peets.com/Medialist.cfm. A
replay of the teleconference will be available at 5 p.m. PT/8 p.m.
ET through 11:59 p.m. ET on May 8, 2006 at 1-888-203-1112 or
719-457-0820, using access code 2419072. It will also be archived
at http://investor.peets.com/Medialist.cfm through May 2, 2007.
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
http://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 2006 second
quarter and full year revenue, earnings per share and stock-based
compensation expense 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, the Company's stock price volatility,
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 impact of
the Company's stock price volatility on the valuation of
stock-based compensation under SFAS 123(R); 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 1, 2006. 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. Stock-based Compensation Expense Effective January 2,
2006, the beginning of Peet's first fiscal quarter of 2006, the
Company adopted the fair value recognition provisions of Financial
Accounting Standards Board Statement No. 123(R), Share-Based
Payment ("SFAS 123(R)"). SFAS 123(R) requires all stock-based
compensation, including grants of employee stock options, to be
recognized in the statement of earnings based on their fair values.
The Company is providing the table below because management
believes it provides useful information to investors regarding the
Company's results of operations by separately identifying the
stock-based compensation expense and providing reported amounts on
a basis comparable to that used in prior periods. The application
of SFAS 123(R) had the following effect on reported amounts for the
13 weeks ended April 2, 2006 relative to the amounts that would
have been reported using the intrinsic value method under the
Company's previous accounting (in thousands, except earnings per
share): Using Previous Stock-based Accounting Compensation As
(non-GAAP) (non-GAAP) Reported Cost of sales and related occupancy
expenses $22,356 $137 $22,493 Operating expenses 17,066 347 17,413
General and administrative expenses 3,092 545 3,637 Operating
income 4,120 (1,029) 3,091 Income before income taxes 4,797 (1,029)
3,768 Income tax provision 1,812 (370) 1,442 Net income 2,985 (659)
2,326 Net income per diluted share $0.21 $(0.05) $0.16 Diluted
shares outstanding 14,478 131 14,609 The amounts shown in the
column above entitled "Using Previous Accounting" are considered
"non-GAAP financial measures" under applicable SEC rules because
they exclude the stock-based payment expense that is included in
the directly comparable measures calculated in accordance with
generally accepted accounting principles in the United States
("GAAP"), which are shown in the column entitled "As Reported."
These non-GAAP financial measures are not a substitute for the
reported GAAP measures. PEET'S COFFEE & TEA, INC. CONSOLIDATED
STATEMENTS OF INCOME (Unaudited, in thousands, except per share
amounts) April 2, April 3, 2006 2005 Retail stores $33,400 $27,283
Specialty sales 16,307 12,705 Net revenue 49,707 39,988 Operating
expenses: Cost of sales and related occupancy expenses 22,493
18,071 Operating expenses 17,413 13,501 Marketing and advertising
expenses 1,090 831 Depreciation and amortization expenses 1,983
1,680 General and administrative expenses 3,637 2,194 Total
operating costs and expenses 46,616 36,277 Income from operations
3,091 3,711 Interest income 677 328 Income before income taxes
3,768 4,039 Income tax provision 1,442 1,611 Net income $2,326
$2,428 Net income per share: Basic $0.17 $0.18 Diluted $0.16 $0.17
Shares used in calculation of net income per share: Basic 13,892
13,564 Diluted 14,609 14,169 PEET'S COFFEE & TEA, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands, except share
amounts) April 2, January 1, 2006 2006 ASSETS Current assets Cash
and cash equivalents $29,328 $20,623 Short-term marketable
securities 23,565 32,453 Accounts receivable, net 5,635 5,152
Inventories 14,754 16,148 Deferred income taxes 1,514 1,514 Prepaid
expenses and other 4,085 3,372 Total current assets 78,881 79,262
Long-term marketable securities 16,740 16,890 Property and
equipment, net 48,333 46,313 Intangible and other assets, net 5,578
5,434 Total assets $149,532 $147,899 LIABILITIES AND SHAREHOLDERS'
EQUITY Current liabilities Accounts payable $5,157 $5,523 Accrued
compensation and benefits 6,738 5,563 Deferred revenue 2,881 3,415
Other accrued liabilities 3,085 3,030 Total current liabilities
17,861 17,531 Deferred income taxes 1,759 1,759 Deferred lease
credits and other long-term liabilities 2,869 2,537 Total
liabilities 22,489 21,827 Shareholders' equity Common stock, no par
value; authorized 50,000,000 shares; issued and outstanding:
13,837,000 and 13,902,000 shares 97,905 99,273 Accumulated other
comprehensive loss, net of tax (63) (76) Retained earnings 29,201
26,875 Total shareholders' equity 127,043 126,072 Total liabilities
and shareholders' equity $149,532 $147,899 DATASOURCE: Peet's
Coffee & Tea, Inc. CONTACT: Media, Jennifer Strasburg of Weber
Shandwick, +1-415-248-3436, or , for Peet's Coffee & Tea, Inc.;
or investors, Maria Butler-Hadas of Peet's Coffee & Tea, Inc.,
+1-510-594-2196, or Web site: http://www.peets.com/
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