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Second Cup café sales drop 1.5 per cent in second quarter

Canadian coffee shop chain Second Cup announced their second quarter results, noting that same café sales declined by 1.5 per cent in the quarter. 

"We continue to feel the increasing competitive pressure on our same café sales through [the second quarter]," said Stacey Mowbray, President & CEO of Second Cup, in a statement. Mowbray noted that this drop has affected the company's profitability.

During the Quarter, the company reported it has invested in research and development on test concepts and new initiatives, including the opening of five cafés in the wuarter, bringing the total to seven year to date. The company said it will open approximately 25 cafés in 2012, which will result in three consecutive years of net new growth.

"As per our plan, we closed four cafés during the quarter (10 cafés year to date), the majority of which were underperforming cafés at the end of their lease term," said Mowbray. The company noted that staring this fall, it will enter the single serve market through a partnership with Kraft Canada Inc. Starting in late September, the company will be selling a variety of Second Cup branded Tassimo T Discs in cafés and in grocery stores. This fall will also mark the start of the company's partnership with Free the Children, starting with We Day and following with in store activity.

"With these exciting new partnerships, an investment in innovation, a calendar of promotions, product news and local café marketing and with the enthusiasm of our franchise partners, we are confident in moving our brand back to positive same café sales," said Mowbray.

The company's total revenue for the quarter hit close to US$6.2 million, representing a slight increase over 2011. The company, which is traded on the Toronto Stock Exchange, issued a declared dividend of $0.15 per share.

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