Peet's Store Growth Quickens

EMERYVILLE, CA-Peet’s Coffee & Tea Inc. said Tuesday that the fourth quarter of this year will be its most productive ever for store openings, with 10 to 12 new locations due to open before the end of the year. “We are in the midst of our most productive new store quarter ever,” Peet’s president and CEO Patrick O’Dea commented. The company, which opened six new stores in the third quarter, expects to open between 30 and 35 new stores next year, along with projected revenue growth for 2007 of target of 20% to 23%.

Peet’s discussed store growth plans on Tuesday in a conference call with financial analysts, during which the company reported that preliminary earnings for the third quarter ended Oct. 1 were $1.4 million or 10 cents per share, compared with $2.2 million and 15 cents per share for the comparable period a year ago. Revenue increased 18.7% to $50.9 million from $42.9 million for the corresponding period of fiscal 2005.

The company’s third-quarter results “were right on track with our previous guidance,” O’Dea said, but the results are preliminary pending a review of the company’s past stock option granting practices. With so many companies facing reviews of their past stock option granting practices, Peet’s said that it is undertaking a voluntary review and that its preliminary third quarter results as well as its 2006 and 2007 earnings forecasts are subject to adjustments from the review.

If not for the option review, the company would expect fourth quarter earnings from ongoing operations to be approximately 25 cents per share. Nonetheless, O’Dea said that Peet’s expects to have momentum entering 2007. “We expect to get off to a quick start in our retail business with six to eight new stores in the first quarter,” he said.

The company’s $50.9 million in revenue for the quarter ended Oct. 1 included retail revenue that increased 19.6% to $34.4 million. The increase was primarily attributable to new retail stores opened in the last 12 months and secondarily to growth in existing stores.