Canadian economics and coffee

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As coffee is the worlds second largest (legally traded) commodity, this news "factoid" has greater significance than would appear on the surface.

Friday August 14. Canadian Press.


"Second Cup reports drop in second-quarter earnings compared with year ago."

Second Cup Royalty Income Fund (TSX: SCU-UN.TO)

...said Friday it expects to close more coffee shops this year than it had earlier expected (to) as it reported (a) drop in second-quarter earnings compared with a year ago, as sales at its coffee shops fell.

In its outlook for the year, Second Cup said Friday it expects to close 25 to 30 cafes this year, compared with earlier guidance of 15 to 20 cafes as part of an effort to close unprofitable company-owned cafes to improve overall earnings.

Second Cup said it expects to open 10 to 15 new cafes in Canada and to renovate 20 to 24 of its cafes.

There were 359 cafes included in the fund's royalty pool at June 30. Hurt by the downturn in the economy, the coffee shop income trust said it earned $2.3 million or 23 cents per unit for the quarter (that) ended June 30, compared with a profit of $2.9 million or 30 cents per unit a year ago.

Sales of cafes included in the fund's royalty pool totalled $46.5 million, down from $49.1 million.

Same cafe sales were down 4.7 per cent compared with 0.9 per cent growth a year ago. Year-to-day, same cafe sales were down 3.9 per cent compared with 1.1 per cent growth in the first six months of 2008.

"While the impact of the economy in Canada continues to adversely affect same cafe sales for Second Cup, we continue to focus on the outstanding quality of our products." Second Cup president and chief executive Stacey Mowbray said.