Caribou Coffee Co Inc (CBOU)

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Caribou Coffee Blames Single-Serve Market For Lowered Guidance

May 3, 2012 18:05:43(ET)

By Annie Gasparro Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Caribou Coffee Co. (CBOU) lowered its sales and earnings expectations for the year, saying growth of its coffee-packet sales for single-serve at-home brewers is moderating.

Caribou sells branded K-cup coffee packets for use with Green Mountain Coffee Roasters Inc.'s (GMCR) Keurig brewers. "While the single cup business continues to experience significant growth, recent industry trends lead us to believe this business line will experience a moderation in its growth trajectory for the remainder of 2012," says Caribou Chief Executive Michael Tattersfield.

As a result, Caribou loweredits annual outlook for sales growth to between 6% and 8% and its earnings to between 47 cents and 50 cents per share. In February, the company projected sales growth of about 10%and earnings of 48 cents to 51 cents per share.

Caribou's first-quarter earnings rose 19%as the packaged coffee and cafe company logged stronger sales at its cafes and in grocery stores. But the pullback in its outlook caused shares to fall 11% to $12.45 after market hours Thursday, after dropping 15% during the trading day.

The company's tempered outlook of K-cup sales for Keurig brewers comes as Green Mountain said Wednesday that it, too, will likely make less money than it expected because of deceleration indemand for its brewers and K-cups.

Caribou's same-store sales at its coffee houses increased 2.5%in the first quarter. The company's commercial and franchise sales--which includes its single-serve business and grocery sales--increased 41.9% in the quarter.

Caribou reported a first-quarter profit of $1.2 million, or 6 cents per share, compared with $24.1million, or $1.17 a share, ayear earlier. Excludinga tax benefit in the year-ago period, the company's profit was $1.6 million, or 8 cents per share. Revenue rose 11% to $80.5 million.

Analysts polled by Thomson Reuters were expecting earnings of 6 cents per share on revenue of $82 million.

Green Mountain saw its stock get cut nearly in half Thursday, now trading at $25.87, as the company said it's having difficulty predicting consumer demand for its products, which is weighing on its profit margin; and investors questioned whether Green Mountain could sustain its recent growth.

The recent reaction by both Green Mountain and Caribou raises questions on whether other coffee companies that have deals with Green Mountain to produce K-cups, such as Starbucks Corp. (SBUX) and Dunkin' Brands Group (DKNK), will see a similar deceleration in growth. However, Starbucks and Dunkin' rely less on K-cup sales for their overall earnings than either Caribou or Green Mountain.

-By Annie Gasparro, Dow Jones Newswires; 212-416-2244; [e-mail]

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(END) Dow Jones Newswires

May 03, 2012 18:05 ET (22:05 GMT)