News of Charges, Losses Hurt Diedrich Stock
Shares of specialty coffee retailer Diedrich Coffee Inc. slumped 26% after the company said it expects to record substantial noncash charges related to its Gloria Jean’s unit. The Irvine-based retailer said the charges, which reflect the closing of 39 Gloria Jean’s mall-based stores and other operating shortfalls in the Gloria Jean’s operating division, will show up in fourth-quarter and year-end results for the fiscal year that ended Thursday. The company also said it expects to record a substantial loss for its fourth quarter and fiscal year. Diedrich expects to be in violation of its bank agreements starting today and is negotiating with its lender to amend its credit agreements. The lender has said it won’t enforce the agreements for 30 days during the renegotiation of terms. Diedrich has 360 coffeehouses in 38 U.S. states and nine countries. Shares of Diedrich lost 75 cents to close at $2.13 on Nasdaq.