Second Cup suspends dividend following poor performance in second quarter

Second Cup has reported that it will suspend its quarterly shareholder dividend to allow for upcoming investments. The Board of Directors made the decision to discontinue the dividend payout in favour of “attractive opportunities to invest capital,” the company has said in a statement. “We have embarked on a journey to restore Second Cup to a leadership position with growth in sales and profitability,” said Alix Box, President and CEO at Second Cup, in a statement. “Already we have completed a number of important steps including the downsizing and restructuring of our Coffee Central team, improving franchisee profitability, and assembling a talented new leadership team.” Second Cup franchised cafés reported net revenue of US$41.8 million in the thirteen weeks ending 28 June. This was a drop of 3.9 per cent over the same time last year. Second Cup sales from cafés that have been in operation for over 12 months declined by 5 per cent. This compares to a 2.2 per cent decline in the comparable quarter of 2013. The Canadian specialty coffee company reported an increase in revenue from its sale of goods, company operated cafés and wholesale revenue. This is a US$2 million increase on the 2013-second quarter, which it said was due to the sale of Second Cup coffee in grocery stores. Box, who commenced as Second Cup CEO just a few months ago, said that although the company was in the early stage of redevelopment she was proud of the progress to date. “I understood that this would be a journey filled with challenges,” said Box, in the statement. “Today, I am excited about our company's potential. There is much work to do and it will take time, but I am confident that we can build a brighter future for the Second Cup brand.” According to Box, Second Cup will unveil a “store of the future” in Toronto later in the year. The company intends to eventually roll out the new design across Canada.