Keurig loses steam, cuts 5% of jobs
Keurig Green Mountain (GMCR), the maker of quick-serve coffee machines and those ubiquitous coffee pods, plans to cut its workforce by 5% after reporting a massive sales slump in the third quarter, the company said Thursday.
Keurig shares fell nearly 28% in morning trading on the news.
The company said the job cuts are part of a "multi-year productivity program" that will save $300 million over the next three years. The news comes as Keurig says it struggled to sell its coffee machines and pods in the thirteen weeks ended June 27.
Sales of brewers and accessories fell 26% compared to the same period a year ago, in part due to high levels of inventory in retail stores and promotions to sell off inventory at lower prices, the company said. Sales of Keurig's single-serve pods fell 1%.
President and CEO Brian Kelley said that the company "is not pleased with our revenue growth," but "we are taking decisive actions to adapt and compete more effectively in today's rapidly-evolving, dynamic marketplace."
Kelley said Keurig's goal is to have the company's hot coffee brewers in more than 50 million U.S. households, which is double what it reaches now. He expects a new Keurig K200 brewer introduced in the third quarter to help.
Overall, Keurig recorded a revenue decline of about 5%, to $969.6 million. Net income fell 27% to $113.6 million, or 73 cents a share. That's down from $155.2 million, or 94 cents a share, in the year-ago quarter.
The company expects a net sales decline in the low-single to mid-single digits for the year
