Green Mountain Roaster's Keurig Brand At J.C. Penney

Today, Green Mountain Coffee Roasters, marketers of Keurig-branded single-serve brewing systems, reported net sales for its fiscal third quarter of $869.2 million, a 21% increase over net sales of $717.2 million for the comparable period of 2011. For the quarter, the company reported GAAP net income of $73.3 million, up 30% from the prior year period, and non-GAAP net income of $82.9 million, up 9% from $75.7 million for the prior year’s quarter.

"Our third quarter results demonstrate continued business strength and solid fundamentals, particularly in light of the robust comparable quarter we reported in the year ago period," said Lawrence Blanford, GMCR's president and CEO. "Our Keurig single-cup brewing system continues to revolutionize the way North Americans prepare and consume their single-serve beverages, and our proven ability to grow consumer awareness and demand for the system has enabled us to deliver extraordinary results over the past five years.”

According to the company, approximately 89% of consolidated third quarter net sales were from purchases of Keurig single-cup brewers, single-serve packs, and Keurig-related accessories, with the remainder of net sales consisting primarily of revenue from bagged coffee and sales from the office coffee services business.

The company indicated that single-serve pack sales were driven by a 28 percentage point increase in sales volume and a 3 percentage point increase in K-Cup pack net price realization due primarily to price increases implemented during fiscal 2011 to offset higher green coffee and other input costs.

GMCR sold 1.4 million Keurig Single Cup Brewers during the third quarter of fiscal year 2012. This brewer shipment number does not account for consumer returns, according to the company. The company estimates that the combination of brewer shipments from GMCR and its licensed partners resulted in shipments of 1.5 million Keurig Single Cup Brewers in the third quarter of fiscal year 2012.

The third fiscal quarter's net sales included $20 million of sales of new Vue brewers and Vue packs. According to data from The NPD Group, Vue brewer sales were more than two times that of other coffee and espresso makers in its price category in the quarter ending June 2012.

"As we become larger our sales growth trajectory will understandably moderate from hyper-growth to a level more in-line with other successful growth businesses," said Blanford. "Based upon our current analysis of business fundamentals and the single-serve opportunity, we believe we will deliver annual sales growth in the range of 15% to 20% with annual earnings growth in the mid-teens over the longer term."

In another development, the company also announced that Norman Wesley, former CEO and chairman of Fortune Brands, Inc., has joined the Green Mountain Roasters board of directors. Effective immediately, Wesley will be a Class II Director with a term that expires at the company's 2013 annual meeting where he will stand for election by shareholders, Green Mountain Roasters stated. His addition expands GMCR's board of directors to nine members, seven of whom are independent.

"Norm has significant operational and strategic expertise from more than 20 years as a senior executive, including as chief executive officer of a multinational, multi-channel and multi-branded publicly traded consumer products company," said Michael Mardy, interim chairman of GMCR's board of directors. "In particular, we believe his financial expertise will further enhance the ability of the board to oversee and monitor the company's strategic planning as GMCR pursues opportunities for continued growth including leveraging its core competencies into adjacent categories."