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Showing posts from May, 2012

Are they really that stupid at Green Mountain Coffee Roasters?

There is a saying among white-collar criminals, “When you are caught in the act of doing something wrong, play stupid. Tell them that you made an inadvertent error. Never admit to any deliberate wrongdoing. Being stupid is not a crime in America.” The board of directors and executives running Green Mountain Coffee Roasters (NASDAQ: GMCR) appear to want the Securities and Exchange Commission who is investigating the company, the Judge presiding over class action lawsuits alleging securities fraud, and investors to believe they are incredibly incompetent or grossly negligent, rather than admit to any deliberate wrongdoing. There can be either one of two answers for the continuing mishaps plaguing Green Mountain Coffee. Either they are dumb or they engaged in deliberate wrongdoing. Unfortunately, none of those answers bode well for the company. In any case, a rational question to ask is “Why are these clowns still running a $3.74 billion market cap public company?”

Background

On May 8, 20…

Green Mountain Coffee Roasters: Is it toxic or is it phantom inventory?

In the days leading up to Green Mountain Coffee's (NASDAQ: GMCR) latest earnings report released yesterday, this blog published two reports warning investors about a toxic level of inventory building up at the company. (Details of those reports here and here.)

I detailed how in every quarter since the start of fiscal year 2011, Green Mountain Coffee's inventory turnover had decreased when each quarter’s numbers are compared to the same quarter of the previous fiscal year. In four of those five quarters, Green Mountain Coffee's reported revenues exceeded the guidance it gave investors just weeks earlier. Its inventory turnover should have increased because it delivered more products than anticipated to its customers before the close of each quarter to meet unexpected excess demand. Instead, Green Mountain Coffee’s inventory turns decreased, reflecting a longer time to sell its inventory despite reporting revenues that exceeded it projections.

Yesterday, Green Mountain Coff…

Is Green Mountain Coffee's Inventory Approaching Toxic Levels?

In four of the last five quarters since the beginning of fiscal year 2011, Green Mountain Coffee’s (NASDAQ: GMCR) reported revenues exceeded the revenue guidance it gave investors just weeks before the close of each quarter. In those quarters, its inventory turnover should have increased compared to the same quarter of the previous year because it delivered more products than anticipated to its customers before the close of each quarter to meet unexpected excess demand. Instead, Green Mountain Coffee’s inventory turns decreased, reflecting a longer time to sell its inventory despite reporting revenues that exceeded it projections.

Furthermore, in every quarter since the start of fiscal year 2011, Green Mountain Coffee's inventory turns have increased when each quarter’s numbers are compared to the same quarter of the previous fiscal year. It's taking Green Mountain Coffee longer to sell its inventory when you compare each quarter to the same quarter of the previous fiscal yea…