The future looks bleak for Green Mountain Coffee, at least for the year 2011, as they announced lower profits than anticipated for the coming year. Topped with that is the pulled shipment and distribution for one of their leading products which is the K-cup coffee packs. Surveillances of the accounting practices of the company by the Securities and Exchange Commission have been put under occurring with some irregularity in proceedings being detected and that has attributed to the see-saw in the share prices. As on December 9th, 2010 prices went down to $30.86 causing alarm amongst investors and stock brokers alike. (Not to mention coffee lovers who enjoy Green Mountain coffee in their cup holder.)
The company’s plans of expansion have caused a blow to their shares in the market since softer profit figures have been released pegging the reason as finances being diverted to this immediate goal of the company. After ranking as 2nd in Forbes list of the fastest emerging companies, Green Mountain Coffee is surprising many financial pundits. Now with profits of shares in 2011 being revised to $1.19 per share from the earlier declared $1.24 to $1.29 a share the company has come all out to declare investors not to pay heed to the forecast of July 11th , 2010. Green Mountain Coffee had announced that their K-cup shipments would increase from 64% to 68% in the fiscal 2011 but that does not seem to be the course the business is taking. The company has now decided against making any further forecasts for K-cup or Keurig single cup coffee brewing machines.
With all hope not being lost just yet for Vermont’s fasting growing company, there is a renewed concentration on packaging and enhancement of production line for their much in demand K-Cup. The coming holiday season is bound to bring some cheer since the Keurig brewing machines are being positioned in the market as great winter holiday gifts (along with our drink holder and other wheelchair accessories) so sales are bound to see an upward trend in 2011 for this line of product in the food and beverage industry. Just this September quarter profits ranging up to $27 million were declared by Green Mountain for the Keurig brewing machine higher than the $14.1 million raked in the company the same time last year.
About a 1.4% decrease in the gross margin versus last year has been seen in the accounting books of Green Mountain. It seems many customers are returning the Keurig brewing machines under the warranty period given by the company and that is affecting the expenses against warranty. Apart from this the cost of acquisition of green coffee is at a 13 year high.