Diedrich Posts Profit, Issues Warning

Irvine coffee retailer Diedrich Coffee Inc. posted its second consecutive profitable quarter Thursday on sharply higher revenue.

But the company warned that it expects to be in the red again for the year, largely because of costs related to shoring up its executive ranks.

Diedrich said it hired three industry veterans--two of them filling new positions--during the quarter. The company also hired a new chief financial officer.

The executives will help carry out the company’s ambitious expansion plans. The company expects to open 1,200 to 1,500 new coffeehouses over the next five to seven years through franchise agreements.

Diedrich reported a profit of $79,000, or 1 cent a share, for the third fiscal quarter ended March 8, compared to a net loss of $568,000, or 9 cents a share, for the 1999 quarter ended April 28. Revenue climbed to $16.7 million from $6.1 million. Last year, the company moved the end of its fiscal year to June from January.

The company attributed the increases to its acquisition last July of a larger rival, Coffee People Inc., as well as a 4.7% sales increase in Diedrich stores that had been open at least a year.

In the last fiscal year, the company lost $3.4 million, or 42 cents a share, on sales of $22.6 million. Analysts were expecting earnings of 3 cents a share this fiscal year, according to a survey by First Call/Thomson Financial.

The stock, which has lost more than 27% of its value this year, closed Thursday at $2.94, up 16 cents a share, in Nasdaq trading.