Coffee results leave bitter taste

Related tags Starbucks Generally accepted accounting principles

Diedrich Coffee has blamed poor financial results for the fiscal
year ended 2 July 2003 on impairment and restructuring costs.

Diedrich Coffee has blamed poor financial results for the fiscal year ended 2 July 2003 on impairment and restructuring costs. The California-based business reported a net loss of $1,223,000 in fiscal 2003, after recording an impairment charge for the year of $2,231,000, primarily to reduce the net carrying value of its goodwill and three coffeehouses.

"The impairment charges recorded in the most recent quarter were non-cash accounting matters that mask the progress we have made on several fronts,"​ said Diedrich Coffee chief executive Roger Laverty.

"We began a major remodeling program for our company operated Diedrich Coffee locations, initiated a number of organizational changes to support increased growth of our domestic Gloria Jean's franchise system, and experienced continued acceleration of franchise growth in international markets. We are encouraged that this progress will allow us to successfully execute our growth strategy."

Operating income for the quarter declined by $2,514,000, to an operating loss of $1,623,000 from operating income of $891,000 in the year ago quarter. This decline was generally due to the same factors as noted for the full year results, and an unfavourable match-up against an extra fiscal week during the year ago quarter.

Total revenue for the year ended 2 July 2003, was $54,779,000, a decrease of $7,428,000 compared with revenue of $62,207,000 for the prior year ended 3 July 2002. This decrease consists of a decline in retail sales of $5,624,000 and a decrease in wholesale revenue of $1,345,000 and a $459,000 decrease in franchise revenue.

Despite these figures, the company claims to be in a good position to consolidate existing markest and to capitalise on new opportunities.

"I am extremely enthusiastic about the strength and growth potential of our core assets -- powerful brands in the dynamic specialty coffee industry,"​ said Laverty. "We are currently in the process of developing and implementing specific initiatives to revitalise our store operations and realign the organization to provide effective support. Once we have had an opportunity to assess the impact of these initiatives, I will be able to communicate more about our specific growth expectations."

Diedrich Coffee​ specialises in sourcing, roasting and selling quality coffees. The company's three brands are Gloria Jean's Coffees, Diedrich Coffee, and Coffee People. The company's 417 retail, the majority of which are franchised, are located in 36 states and 10 foreign countries.

Related topics Manufacturers Tea and Coffee

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