Better Store Results Prompt Diedrich to Cut Cost Estimate

Diedrich Coffee Inc. said Wednesday that it will cut in half the estimated restructuring charges it had planned to take this quarter because improved performance at some stores has taken them off the list of those targeted for closure.

The Irvine coffeehouse chain operator said in a press release that it will record a charge of $700,000 to $900,000 for its fiscal third quarter, which ends March 7, instead of the original estimate of $1.8 million to $2 million.

The expenses relate to closing certain underperforming company-operated stores this year, relocating its Gloria Jean’s division administrative support center to Irvine and providing severance expenses for administrative cutbacks.

Diedrich, burdened by losses and an overly aggressive expansion, has completed the Gloria Jean’s relocation and work force reductions. With 374 stores in 37 states and 10 other countries, Diedrich lost $22.4 million on sales of $74.5 million for its fiscal year ended June 28.

The company released its news after the stock market closed. Its stock had lost 6 cents to close at 56 cents a share on Nasdaq but traded after hours as high as 75 cents.