Diedrich Short of Assets Requirement, Nasdaq Says
Diedrich Coffee Inc., the Irvine-based coffee roaster and retailer, received a Nasdaq determination Friday that the company’s stock is out of compliance with Nasdaq’s minimum net tangible assets requirement.
On Friday, the company also reported a net income of $163,577, or 1 cent per share, for the 12 weeks ended Dec. 13, 2000. That was down 73% from a profit of $599,028, or 5 cents per share, a year earlier. Its latest fiscal second-quarter revenue rose by 1.4%, to $19.4 million.
The Nasdaq determination follows a Jan. 18 formal notice that the company faces delisting for failure to maintain the required $1 minimum bid price.
On Nov. 28, Diedrich said it was in discussions with Nasdaq and expected to receive a formal delisting notice because of its low stock price.
Diedrich intends to request a listing hearing, which will stay any delisting pending a decision from a listing qualifications panel.
Diedrich shares closed Friday at 88 cents, up 3 cents, or 3.7%.
The company also said it is in discussions with one or more potential equity investors. The company has retained the services of the investment banking firm Houlihan Lokey Howard & Zukin to help it with any equity investment.
In its latest quarterly results, Diedrich said same-store sales at the Diedrich Coffee chain rose 1% from a year earlier. Same-store sales fell 9% at Coffee People stores and 11.3% at Coffee Plantation, while Gloria Jean’s same-store sales fell 3.8%.
Overall, retail revenue for the 12 weeks ended Dec. 13 increased 5.5% to $11.6 million, compared with $11 million for the same period in the prior year. Wholesale and other revenue for the most recent quarter were essentially unchanged from a year earlier, but franchise revenue decreased 14.7% from the previous fiscal year.
Diedrich said the decrease in net income from the prior-year quarter resulted from lower same-store sales and increases in general and administrative expenses, store operating expenses and depreciation.
Store operating expenses increased mainly because of higher labor costs, including higher wage rates, increased staffing levels and the cost of providing a more competitive benefits package to store employees. Depreciation expense increased as a result of opening six new coffeehouses during the latter part of fiscal 2000 and the acquisition of roasting plant equipment.
The company said Diedrich Coffee is relocating administrative support operations for Gloria Jean’s from Castroville, Calif., to Irvine.
Diedrich Coffee also restructured certain functions in its Irvine headquarters, eliminating a number of positions. During the current fiscal year, Diedrich Coffee has eliminated a total of 31 jobs. The company expects savings of about $3.1 million a year as a result of the job cuts and other measures.
Diedrich reserved for the cost of closing certain underperforming company-operated locations in each of its four brands, and expects a related a third-quarter charge of about $1.8 million to $2 million.
