Keurig Green Mountain Inc. announced yesterday it expects to reduce its workforce by about 5 percent as the company grapples with declining sales of its brewers and single-serve coffee pods. The company’s revenue came in at $970M, compared with the consensus outlook of $1B.
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As a result, it is hard to argue that GMCR can avoid responding with some level of incremental promotion on its owned brands (which carry higher, albeit similar, profit per pod than those manufactured for branded partners). The company has a market cap of $11,545 million and the number of outstanding shares have been calculated to be 153,969,000 shares.
Keurig said in a statement that it expected revenue to be flat to up low-single digits and adjusted earnings per share to decline mid-single digits for the year ending in September.
Looking forward, Keurig hopes that its new Keurig Kold brewer will make a splash in the market after its launch, but for now, it expects earnings declines for fiscal 2015 in the low double-digit percentage range, and that’s far worse than most investors had foreseen.
Keurig Green Mountain (NASDAQ:GMCR) last issued its quarterly earnings results on Wednesday, August 5th.
The company expects modest growth in fiscal 2016 in its hot drink business having also invested $100 million in its cold beverage system Kold.
As noted earlier, Keurig Green Mountain was already hit with two downgrades, from Canaccord and Susquehanna. Additionally, the company’s valuation is now well below the average of its peers and new brewers it plans to introduce during the holiday season could improve its competitive positioning, said Anderson, who kept an Outperform rating on the shares.
However, analysts remain skeptical about the long-term prospects of the machine considering it is priced too high at $300. He points out, however, that the company’s FY16 guidance is “not fully conservative” and that questions remain if brewer volumes can grow in Q1.
On a different note, The Company has disclosed insider buying and selling activities to the Securities Exchange, Steele Robert Allan, director of Keurig Green Mountain, Inc., executed a transaction worth $221,900 on May 20, 2015.
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CNBC reported that the company plans to cut $300 million in costs over the next three years, with about $100 million in cuts in fiscal 2016. Now the company Insiders own 0.1% of Keurig Green Mountain, Inc.
