NEW RESEARCH: Quarterly Update Available on Truett-Hurst (THST)

Posted by Laura Swartz

December 4, 2014 at 11:18 AM

THST-Update-1-CoverCrystal Research Associates has released a 16-page Quarterly Update on Truett-Hurst, Inc. (THST-NASDAQ). Truett-Hurst is a wine sales, marketing, and production company specializing in $7.00 to $50.00 per bottle wines. The company is known for its quality and packaging innovations. Based in the Dry Creek and Russian River Valleys of Sonoma County, California, its product line includes over 30 wine brands. Truett-Hurst’s largest business segment is its retail exclusive label partnerships with major retailers, including Trader Joe’s, Safeway, and Total Wine & More. For retail exclusive label sales, the company combines its competitive grape sourcing and skill in wine making and production with its understanding of consumer trends and unique approach to creating wine bottles that stand out on the retail shelf. These wines are sold exclusively by a retailer (e.g., Safeway) under a retail exclusive brand. The company also produces four of its own wine brands, which are sold through U.S. and Canadian distributors. Truett-Hurst further capitalizes on several direct-to-consumer sales channels, such as tasting rooms at its California wineries, wine clubs, and online sales through The Wine Spies, LLC (www.thewinespies.com) (an Internet wine retailer specializing in limited offerings and other online offerings as well as flash sales).

The Quarterly Update details new company announcements, milestones, financial results, and more that have occurred since the publication of our base report, the Executive Informational Overview (EIO), on Truett-Hurst in August 2014. (To download and read the 72-page EIO, please click here.)

Highlights from the December 2014 Quarterly Update:

  • The company recently announced its first quarter fiscal 2015 (FY15) financial results. Net sales were up 20% to $6.5 million from $5.4 million (+$1.1 million) due to strong sales of the company’s DTC channel, combined with sales from the Internet channel, which increased 194% to $4.1 million. Growth from the DTC division was driven largely from continued growth in wine club sales, tasting room sales, and targeted promotions. Internet growth was attributable to increased website traffic, Internet marketing, and expanding customers through a new partnership model.

  • Gross margins expanded during the quarter to 38% from 33%, and gross profit was up 36% to $2.4 million. Specifically, wholesale gross margins were up 1.3% to 27.5%, DTC gross margins grew 4.8% to 64.8%, and Internet gross margins expanded 6.9% to 47.5%.

  • The company continues to gain new customers as well as create new products. Specifically, during the quarter, a new California Winecraft project with Kroger Company was announced, which is expected to launch by the end of FY15. As well, Truett-Hurst continues to add new customers, such as Target, which selected at least eight of Truett-Hurst’s products to carry in 1,300 of its stores.

  • Truett-Hurst is led by a team of industry veterans, who have established a biodynamic winery via a commitment to the environment in conjunction with producing quality wines. The founding team of Mr. Phil Hurst and Mr. Paul Dolan hold decades of industry experience and have had past successes at building businesses to scale. Director of winemaking, Ms. Virginia Marie Lambrix, has experience in making wine for leading producers such as DeLoach Vineyards, La Follette Wines, and Hendry Ranch. In-house designer, Mr. Kevin Shaw, owner of Stranger & Stranger, is believed to be one of the top designers in beverage alcohol.

  • At September 30, 2014, Truett-Hurst held approximately $4.8 million in cash and cash equivalents.

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Topics: Truett-Hurst

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