Boston, MA 09/11/2014 (wallstreetpr) – Coffee Holding Co., Inc. (NASDAQ:JVA) reported a third quarter result (3Q2014) ended July 31, 2014.
Operational highlights
Net sales decreased by 17.7% to $26.6 million compared to $32.4 million in the same period last year. The decline was due to a decrease (down by 20%) in sales of green coffee as a result of the rise in coffee price and market volatility. As a result, it improved the gross margin due to lower cost of sales during the period compared the same period last year.
Operating expenses also decreased by 4% to $1.8 million (3Q2013: $1.9 million) due to lower SG&A costs during the period.
In 3Q2014, the Company reported net income of $0.76 million or $0.11 per diluted share compared to the net loss of $2.22 million or ($0.33) per diluted shares in 3Q2013. The significant improvement was due to favorable lower expenditures and profit earned from the sales.
Opportunity to grow
Coffee Holding Co., Inc. (NASDAQ:JVA) initiated two major steps to drive growth.
A. Products diversification: The Company plans to launch its owned brand of tea (Teton Tea), which will be a fresh addition to the well-diversified product mix and also offer one stop shopping center for customers who prefer green coffee. So, the diversification in products including green coffee and tea will support future sales and earnings.
B. Geographic expansion: Coffee Holding Co., Inc. (NASDAQ:JVA) signed a licensing agreement with DTS8 Coffee Company, who will open its first coffee shop ‘Café de la Don Manuel’ at Shanghai. DTS8 licensed the Don Manuel proprietary name from Coffee Holding so that the Company will receive a percentage of sales of its products. So, it will give an opportunity to target Chinese coffee market.
Going forward
Coffee Holding Co., Inc. (NASDAQ:JVA)’s CEO Andrew Gordon said that the Company delivered encouraging result on the quarter. He said that the Company will report positive earnings in the coming years by leveraging its leadership position in the green coffee market and also have a favorable position in inventory to address the market demand.
