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Caribou's CEO Discusses Q2 2012 Results - Earnings Call Transcript

In terms of profitability, we were pleased to have held net income steady compared to the pro forma net income of the prior year period in the face of coffee commodity cost pressure and a lower contribution from the Keurig single-serve platform.

With that, I’d now like to walk you through the key quarterly highlights and then we’ll turn our attention to the financial details, as well as updated guidance for the remainder of the year.

Comparable coffeehouse sales of 2.8% were solemnly in line with our projection and in fact, the second quarter marked the 11th consecutive period of positive comparable coffeehouse sales for Keurig.

Once again, our ability to innovate and prove, and expand our product offering, help sustain our comp sales momentum and the introduction of our new sparkling juices and cheese with especially timely in view of the unusually hot weather.

In particular, these distinct and refreshing products provide a nice comp lift to our historically lower volume afternoon daypart, and provide yet another example of our building block approach to growing comparable coffeehouse sales and improving average unit volumes. And while we appreciate that we have often given more air time to hire food initiative drive comparable coffeehouse sales, it is clear that beverage innovation has and will be vital to increasing AUV’s as well.

Turning to food, our primary 2012 initiative is to reenergize and expand our bakery taste, given the operational complexity of our breakfast and lunch sandwich roll out over the past 24 months, we have not previously have the opportunity to readdress what is our largest food category.

From a forward-looking standpoint, our innovation pipeline will continue to provide benefits to the second half of the year, as we launch some interesting line extensions to our breakfast sandwich platform, with item such as baked and [grilled] sandwiches, as well as all natural sauces egg and cheese biscuit.

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