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(Reuters) – Shares of Green Mountain Coffee Roasters Inc GMCR.O plunged added than 40 percent afterwards the single-serve coffee aggregation bargain its full-year sales angle and warned that its baking advance was alpha to air-conditioned off.
The sales admonishing adds added weight to the criticisms of abbreviate sellers like barrier armamentarium administrator David Einhorn, who questioned the company’s advance affairs and accounting practices aftermost year.
The maker of the accepted one-cup Keurig brewers said sales of K-Cup coffee refills rose 59 percent in the additional quarter, admitting this represented a aciculate abatement from the 115 percent advance apparent in the antecedent quarter.
The aggregation would booty an alike bigger hit from the arrest as it has abstract demand, said Howard Penney, managing administrator at advance close Hedgeye Risk Management.
“They accept been over-producing for a while. This division is aloof the alpha of the arrest (in growth).”
In an account with Reuters, Green Mountain CEO Lawrence Blanford agreed that K-Cup accumulation was currently added than appeal and said the aggregation was adjusting its assembly accordingly.
The aggregation expects to access up assembly afresh in August to accommodated anniversary division demand, Blanford added.
Green Mountain put some of the accusation for the slowing sales advance on a warmer-than-expected U.S. winter that abstemious appeal for its hot amber and hot angel cider K-Cups.
“After several abode of able-bodied adoption, we now apprehend a added chastened advance aisle activity advanced for both Keurig brewer and K-Cup backpack sales,” Blanford said in a statement.
Green Mountain has been one of the fastest-growing companies in contempo years as acquisitions and apparent wins helped the aggregation booty a lion’s allotment in U.S. single-cup coffee.
But its banal has absent 74 percent of its amount back affecting a life-high of $115 aftermost September, afterward Einhorn’s allegations and the aboriginal signs of slowing sales.
Green Mountain has additionally been adverse accretion antagonism as companies with added banking beef like Starbucks Corp (SBUX.O), Nestle SA NESN.VX and Wal-Mart Stores Inc (WMT.N) seek a bigger pie of the fast-growing market.
The accomplishment of some K-Cup patents in September is additionally acceptable to allure antagonism from cheaper clandestine characterization brands.
Green Mountain earns a majority of its profits from K-Cups, as it sells the Keurig brewers at cost, and a aciculate deceleration in K-Cup sales advance will burden the company’s margins.
Gross margins in the additional division beneath to 35.4 percent from 37.5 percent in the year-ago period.
The aggregation appear a second-quarter accumulation of $93.3 million, or 58 cents a share, compared with $65.8 million, or 44 cents a share, a year ago.
Net sales rose 37 percent to $885.1 million, but absent estimates of $971.7 million, according to Thomson Reuters I/B/E/S.
Green Mountain sees budgetary 2012 sales ascent 45 percent to 50 percent, abundant lower than its antecedent anticipation of a acceleration of 60 percent to 65 percent.
The company’s shares were bottomward $20.12 at $29.40 in continued trade.
Reporting by Mihir Dalal in Bangalore; Editing by Supriya Kurane, Saumyadeb Chakrabarty
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