Dreyer's posts $26 million loss in quarter

by Eric Schroeder
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OAKLAND, CALIF. — Dreyer’s Grand Ice Cream Holdings, Inc. sustained a net loss of $26,186,000 for the second quarter ended June 25. That compares with a loss of $24,348,000 for the same period last year.

Net sales of company brands for the second quarter increased $59,444,000, or 17%, to $414,822,000 after promotional costs. The increase was driven by net sales increases for the company’s premium and superpremium products reflecting continued strong sales of premium Dreyer’s and Edy’s Slow Churned Light ice cream, classic Dreyer’s and Edy’s Grand ice cream and Haagen-Dazs branded superpremium products.

The increase also reflects an increase in net sales of the company’s frozen snacks primarily based on the addition of Skinny Cow ice cream products to the company-owned portfolio following the acquisition of Silhouette Brands, Inc. in July 2004, as well as the recent addition of Dreyer’s and Edy’s Dibs and Nestle kids frozen snacks.

Net sales of partner brands, products distributed for other manufacturers, decreased $17,051,000, or 27%, to $46,091,000 for the second quarter. The decrease is primarily based on the classification of the sales of Skinny Cow as company brands during the period.

The decrease also reflects reduced net sales of certain other brands and the termination of certain distribution agreements.

The decrease partially was offset by the classification of the sales of the Dreamery, Whole Fruit Sorbet and Godiva brands as partner brands following a September 2004 agreement with Integrated Brands, Inc., a subsidiary of CoolBrands International, Inc.

Other revenues decreased $4,601,000, or 41%, to $6,720,000 for the second quarter of. The decrease in other revenues was driven primarily by a $4,327,000 decrease in revenues received from Integrated Brands for transitional manufacturing and distribution.

Total net revenues increased $37,792,000, or 9%, to $467,633,000 for the quarter.

Cost of goods sold increased $31,858,000, or 8%, to $414,659,000 for the quarter. The increase was driven by higher sales and the related increase in distribution expenses offset by a $12,300,000 decrease in the cost of cream and a decrease in drayage expense paid to CoolBrands for the delivery of certain of the company’s products.

The company’s gross profit increased by $5,934,000, or 13%, to $52,974,000 for the quarter, representing an 11% gross margin compared with an 11% gross margin for the same period in 2004.

The increase was driven by a $12,300,000 decrease in the cost of cream, a product mix shift from sales of lower margin partner brands to higher margin company brands and a decrease in drayage expense paid to CoolBrands.

Selling, general and administrative expense increased by $1,813,000, or 2%, to $75,075,000 for the second quarter, representing 16% of total net revenues, compared with $73,262,000, or 17% of total net revenues, for the same period in 2004. The increase in expense in the quarter was primarily driven by increases in marketing expenses, partly offset by decreased professional fees.

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