Dip in sales puts chill on quarterly profit at CoolBrands

COB.A (TSX) dropped 7.8 per cent to close at $1.89, its weakest level since late 2001.

The Globe and Mail
July 18, 2006

Dip in sales puts chill on quarterly profit at CoolBrands

Shares in CoolBrands International Inc. melted to a 4½-year low yesterday after the frozen-treats maker suffered an $11.8-million quarterly loss as costs rose while sales of its frozen desserts wilted.

CoolBrands said yesterday that revenue was $95.5-million in its third quarter ended May 31, up 3.7 per cent from $92.1-million in the same period a year ago. Cost of goods sold increased to $93.8-million from $90.4-million and selling, general and administrative expenses were up marginally to $13.5-million. The loss of $11.8-million, worth 21 cents a share, compared with a year-earlier loss of $6.2-million, or 11 cents.

"Negative results were driven by continued declines in our frozen desserts business, underscoring our need to refocus our brand portfolio on more appealing and strongly differentiated brands and products," stated David Stein, president, chief executive officer and co-chairman. "Our new product initiatives this year, which began showing up on store shelves in the third quarter, reflect that strategy. Meanwhile, our other three operating segments, including our Breyer's yogurt business, showed stable revenues and profitability."

CoolBrands, whose products include Eskimo Pie, Whole Fruit sorbet, Tropicana fruit bars and Chipwich ice cream cookies, also has been labouring under new product competition from giants such as Dreyers and Unilever, while prices for energy and other inputs have spiralled upward.

The company has recently arranged $73.5-million (U.S.) in new three-year credit lines and eliminated its dual-class share structure.

Late last year it sold its franchising division — which licenses outlets under the Bresler's, I Can't Believe It's Yogurt, Ice Cream Churn, Swensen's and Yogen Fruz names — for $8-million to Aaron Serruya, who with his brother Michael founded the company 20 years ago with the first Yogen Fruz store at a suburban Toronto shopping mall.

COB.A (TSX) dropped 7.8 per cent to close at $1.89, its weakest level since late 2001.

CP


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