Caribou's growth beats analysts' expectations

Caribou Coffee Co. posted a strong third quarter Thursday, its profits more than doubling and its sales up 12 percent over a year earlier.

The Brooklyn Center-based company reported net income of $1.6 million, or 8 cents a share, up from 3 cents a share a year ago, and in line with analysts' forecasts as compiled by Bloomberg News. Caribou's sales of $70.2 million topped analysts' expectations by 6 percent.

"It was a very solid quarter," said Mark Argento, an analyst at Craig-Hallum Capital Group. "Not only did they grow the top line and grow it profitably, but they are putting money back into the business."

The company has been hiring new real estate and product development people, "bringing in talent," Argento said. And it has continued rolling out new ovens in many locations -- 200 stores now have them -- for its new line of breakfast sandwiches.

Caribou's comparable sales for stores open at least 12 months were up 4.4 percent over the same quarter a year ago, driven by more customer traffic and higher average checks, the latter primarily due to increased food sales. Caribou launched hot cereal in all of its outlets at the beginning of the year and is now phasing in breakfast sandwiches.

Caribou has 410 company- owned coffeehouses and 129 franchise locations. During the quarter, the company also racked up $11.3 million in commercial coffee sales, up 71.6 percent over a year earlier. That figure includes $2 million from the sale of raw coffee beans for blends it no longer needed, taking advantage of a 13-year high in coffee prices.

Caribou's earnings were released after the market closed. Shares had closed at $11.49, down 11 cents.