Seattle-based Tully’s Coffee Corporation, a specialty coffee retailer, wholesaler and roaster, has posted net sales of US$12.9m for its Q1 2003 ended 30 June, a figure virtually flat year on year.
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The company also reported however a net loss of US$1.9m for the Q1, an improvement of 49% compared to the prior year quarter.
The retail division, with 102 stores in Washington, Oregon, California, and Idaho, saw a 5.8% fall in net sales for Q1 2003. Same-store sales fell 3.8%, reflecting, among other factors, the weak economy, competition and customers purchasing Tully’s whole bean coffees at supermarkets rather than at Tully’s retail stores. Management believes that the company’s recent focus on new products, in-store merchandising and customer satisfaction programmes reflect an improvement from last year’s trends. Net sales from the retail division of US$10m accounted for 78% of total net sales.
The wholesale division, which sells Tully’s branded products in leading supermarkets such as Fred Meyer, Haggens, Larry’s Markets and Safeway, increased net sales by 7.7% for Q1 2003.
The international division increased net sales by 49.4% for Q1 2003 to US$1.4m, reflecting licensing revenue and sales of product and supplies to Tully’s Coffee Japan.
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By GlobalData“Although we have much work to do, I’m pleased that our renewed focus on our core assets, coupled with our expense reduction programs, are beginning to show positive trends,” said Tony Gioia, appointed president and CEO in May 2002: “I want to thank all our dedicated employees for continuing to focus on our customers.”
During the Q1, Tully’s used US$2.3m of cash in its operations. In the prior year quarter, cash flow from operations included the receipt of US$12m from the sale of an international license. Excluding the licensing sale and related amortization, in the prior year quarter the company used US$5.3m of cash in its operations.
Also during the Q1, Tully’s introduced its Tully’s gourmet ice cream to most locations in the Seattle market in July 2002, supported by a bus bill-board and newspaper advertising campaign.
Tully’s new executive team includes Gioia and Kris Galvin, appointed CFO in February 2002. Added to the executive team is Peter Hoedemaker, VP, retail operations, Siobhan Foody, VP, wholesale, and George Andrews, director of supply chain.
Condensed consolidated statements of operations
(US$000s, except per share data)
Thirteen Week
Periods Ended
——————
30 June, 1 July,
2002 2001
——————
(unaudited)
Net sales $ 12,865 $ 12,909
Cost of goods sold and related occupancy expense 6,068 6,712
Store operating expenses 4,326 4,434
Other operating expenses 444 325
Marketing, general and administrative costs 2,663 2,696
Depreciation and amortization 1,102 1,233
Store closure and lease termination costs – 837
——————
Operating loss (1,738) (3,328)
Other (expense) income
Interest expense (176) (265)
Gain on sale of investments 27 –
Interest and miscellaneous income 12 85
Loan guarantee fee expense – (140)
——————
Total other (expense) income (137) (320)
——————
Net loss $ (1,875)$ (3,648)
==================
Net loss per share — basic and diluted $ (0.11) $ (0.23)
Weighted average shares used in computing basic and
diluted net loss per share 16,324 16,177
==================
