Coffee shop chain Second Cup establishes special committee to review options

MISSISSAUGA, Ont. – The Second Cup (TSX:SCU) said Monday it has established a special committee to review its strategic options.

The creation of the committee follows comments by the company earlier this year that it was pursuing options to refinance its debt.

Such strategic reviews by companies often result in a sale or other major transaction.

The coffee shop chain has struggled in the past few years to hold onto market share as rivals such as Tim Hortons and Starbucks have increased their presence.

Tim Hortons increased its store count by 25 locations in Canada its latest quarter to bring its total to 3,717 in this country. It had 3,615 Canadian locations in its third quarter last year.

Starbucks had 1,378 Canadian locations at the end of its third quarter on June 26 compared with 1,348 locations at the end of the same quarter last year.

In contrast, Second Cup, which was founded in 1975, closed six locations in its most recent quarter to leave it with 298 franchised and company-owned cafes in Canada. The chain had 327 locations in the same quarter last year.

The announcement came as the company reported a net loss of $75,000 or a penny per share for the third quarter ending Sept. 24, an improvement from the $1.1 million loss or nine cents per share for the same period last year.

Revenue was nearly $7.7 million, down from almost $9.3 million in the same quarter in 2015.

Same-store sales, which is an important metric in retail, fell 1.2 per cent in the third quarter, as the coffee chain continued to be hurt by the economic downturn in Alberta.