Green Mountain Coffee Roaster Inc.'s (GMCR) fiscal
fourth-quarter profit jumped 38% due to higher sales of the
company's single-serve coffee packs and robust demand for its
Keurig brewers.
Results for the latest period were mixed, as profit growth
exceeded expectations though sales growth was at the low end of the
coffee company's expectations.
Shares fell 2.2% to $60.47 in after-hours trading, as Green
Mountain's sales outlook commentary was also lighter than analysts
expected.
Green Mountain has been the dominant player in the single-serve
coffee industry, deriving nearly all of its revenue from Keurig
brewers, accessories and K-Cup coffee and tea packs. But the
company is facing increased competition from other brewers, such as
Starbucks Corp.'s (SBUX) single-serve machine, and off-brand K-Cups
that have emerged since the expiration of some of its patents.
The company has sought to improve its manufacturing and
marketing, as well as create new brewing machines and expand
geographically to drive future growth.
For the quarter ended Sept. 28, Green Mountain reported a profit
of $127 million, or 83 cents a share, up from $91.9 million, or 58
cents a share, a year earlier. Excluding expenses tied to a
Securities and Exchange Commission inquiry and other items,
adjusted profit grew to 89 cents from 64 cents a share.
Net sales grew 11% to $1.05 billion.
In August, Green Mountain forecast a profit of 69 cents to 74
cents on sales growth of 11% to 15%.
Gross margin widened to 36% from 33.4%.
Sales of single-serve packs climbed 11% to $777.9 million, while
sales of brewers and accessories jumped 27%.
For the new fiscal year, Green Mountain sees per-share adjusted
earnings between $3.75 to $3.85 on sales growth in the high
single-digits. Analysts surveyed by Thomson Reuters had projected
$3.78 in per-share earnings on 10% sales growth.
Green Mountain said it expects sales growth will be stronger in
the back half of the new fiscal year, as a number of currently
unlicensed packs are transitioned to licensed partners.
Green Mountain also issued current-quarter earnings guidance
between 85 cents to 90 cents a share, with sales expected to rise
in the low-to-mid single digits. Analysts expected a profit of 96
cents and 7% sales growth.
On Wednesday, the company also disclosed its board approved a
new stock buyback authorization worth up to $1 billion. The new
program will take effect after a current buyback program with $138
million in remaining authorization is completed.
Write to John Kell at john.kell@wsj.com
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