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UPDATE 3-Green Mountain shares fall on weak sales outlook
February 7, 2013 / 3:06 AM / 5 years ago

UPDATE 3-Green Mountain shares fall on weak sales outlook

* 1st-qtr adjusted EPS $0.76 vs est $0.65

* Raises 2013 EPS range

* Shares down 9 pct after market (Recasts; Adds analyst comment, 2013 outlook)

By Martinne Geller and Juhi Arora

Feb 6 (Reuters) - Green Mountain Coffee Roasters Inc forecast sales growth for the current quarter that is slightly lower than analysts expected as retailers work through unsold inventory of its products after a slower-than-expected holiday season.

The maker of the Keurig single-cup coffee brewer and K-Cups that go with it also reported first-quarter earnings that were 11 cents per share better than analysts expected. It raised its full-year outlook, but only by 8 cents per share in a sign of weakening expectations for later quarters.

That helped send shares down 7 percent in after-hours trade, according to Marc Riddick, an analyst with The Williams Capital Group. Riddick said such a move was not unusual for this stock, which has been volatile since it became the target of short-sellers including Green Light Capital’s David Einhorn.

Riddick also said the change in outlook should not be that alarming since the company has a brand new CEO, Brian Kelley, who just joined from Coca-Cola Co. Kelley, whose favorite Green Mountain Coffee flavor is “Nantucket Blend,” also worked at General Electric Co. That gives him both beverage and appliance expertise, things he’ll need at Green Mountain.

“The existing guidance wasn’t his. He’s been there 60 days. This doesn’t concern me,” Riddick said.

Green Mountain said it expected sales to grow by 14 percent to 18 percent in the fiscal second quarter and 15 percent to 20 percent for the full year.

According to a Reuters calculation, Green Mountain’s second-quarter sales goal translates to a range of $1.01 billion to $1.04 billion, which would miss analyst expectations of $1.06 billion, according to Thomson Reuters I/B/E/S.

For the full fiscal year, the company raised its earnings forecast to a range of $2.72 to $2.82 per share, from a prior range of $2.64 to $2.74 per share. The forecast includes the impact of share buybacks made through the end of January.

The company said on a conference call with analysts that during the fiscal first quarter, it shipped more brewers to retailers than the retailers were able to sell, due to a softer-than-anticipated holiday season.

That left retailers with unsold inventory and now Green Mountain said brewer shipments will decline slightly year-over-year in the current quarter. However retail sales should continue growing, it said, which will help sales of its K-Cups.

Waterbury, Vermont-based Green Mountain’s K-Cups have lost some market share to lower-cost rivals in 2012 after some patents expired. Founder and Chairman Robert Stiller was also demoted after a margin call forced him to sell stock when it was prohibited.

The company recently launched the Rivo espresso machine to rival the Verismo machine by Starbucks.

In the just-ended first quarter, profit rose to $107.6 million, or 70 cents per share, from $104.4 million, or 66 cents per share, a year earlier. On an adjusted basis, the company earned 76 cents per share. Sales rose 15.6 percent to $1.34 billion.

Analysts on average had expected the company to earn 65 cents per share, on revenue of $1.33 billion.

Shares of Green Mountain were down 7 percent at $45.50 after closing at $48.94 on the Nasdaq on Wednesday. (Reporting by Martinne Geller in New York, Arpita Mukherjee and Chris Peters in Bangalore; Editing by Maju Samuel and Andrew Hay)

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