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No Quick Pick-Me-Up for Diedrich: Shares Fall Again

November 30, 2000|From Dow Jones Newswires

Diedrich Coffee Inc.'s shares are now worth less than a cheap cup of coffee.

The Irvine specialty coffee retailer's stock took its lumps again Wednesday after Diedrich said it is expecting any minute to be notified by Nasdaq that its stock has been delisted, ending a four-year adventure on the technology-heavy market.

Most investors, not waiting for the formal notice, have already taken their money out of the stock, which has been steadily losing ground for more than a year.

Diedrich's shares tumbled Wednesday to a 52-week low of 25 cents before closing at 45 cents, off 42 cents, or 48%, one of the biggest daily percentage losses in U.S. markets. A total of 430,000 shares changed hands, more than 14 times the stock's daily volume over the last three months.

The shares had fallen 20% on Tuesday, a day after the company said that an agreement to establish 50 franchise coffee shops in Connecticut, Massachusetts and New York had fallen through.

After the close of regular trading Tuesday, Diedrich warned of the likely delisting, noting that the stock had fallen below the market's minimum listing price of $1 a share.

But Chief Executive J. Michael Jenkins, a turnaround expert who was hired in September, said Wednesday he thinks the company has a bright future.

Jenkins also said he plans to stay on indefinitely. He declined to answer further questions.

Diedrich, a distant No. 2 to Seattle-based industry giant Starbucks Corp., has built its business to 381 coffeehouses in 38 states and 10 foreign countries.

But its losses have been mounting, largely from its poorly performing Gloria Jean's coffee store unit. Diedrich's loss for the fiscal first quarter ended Sept. 30 widened to $1.1 million from $389,000 a year earlier.

Diedrich closed more than three-dozen poorly performing Gloria Jean's stores. The chain also said in September that it planned to shed some company-operated coffeehouses outside of Southern California as part of an agreement with a lender. The company had been in technical violation of its lending agreement.

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