While total revenue rose 17% to $57 million during third quarter, comp coffeehouse net sales dropped 1%, compared with the same quarter a year ago. And, while commercial sales –that is business-to-business sales –jumped 21%, the company's net loss reached $3.1 million, 16 cents a share versus $1.2 million, or 8 cents a share for the prior-year's third quarter.
Acknowledging that comp sales had been down for the past three quarters, during a conference call, Michael Coles, chairman, president and CEO, said, "comp sales turned positive in September." He cited new initiatives for the holiday season among the factors underway to correct course. "We believe we are on track to deliver positive comps in the fourth quarter," he said.
Plans call for the addition of one new beverage and one new food product a quarter at the company's coffeehouses. WiFi has been rolled out in most locations. And, by year-end, the company will have added between 50 and 65 company-owned units and 20 to 25 franchised units.
"We are aggressively pursuing more franchisees in the US and selected international markets," he said, calling the response "very positive." Caribou ended third quarter with 416 company-owned coffeehouses, up from 344 at the same time a year ago. Licensed units numbered 16, up from four at the end of third quarter 2005.
A "major initiative" is underway for commercial sales of Caribou branded coffee to grocery, mass merchant and club stores. This area of the company's overall sales increased 80% year to date, according to Coles. By the end of third quarter, Caribou Coffee was being sold through a total of "1,700 doors," he said.
Product licensing is another area of planned growth. This program is "in the early stages," said Coles. A first step is Caribou Coffee Bar, which he described as "a chewy granola bar," which was launched by General Mills this July. The bar is also being sold at Caribou coffeehouses.
Since its initial public offering on the Nasdaq in September 2005, the company has added 72 net company-owned coffeehouses and 15 licensed units. "We're comfortable with 20% growth a year in a combination of company-owned and licensed units," Coles concluded. He also said the company now has the infrastructure in place to manage franchised growth.
The conference call took place after the close of the Nasdaq on Nov. 1. Shares of CBOU ended trading that day at $7.93 a share. This compares with a 52-week high of $11.50 a share and a 52-week low of $5.91 a share.
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