SANTA PAULA, Calif. (AP) -- Calavo Growers Inc.'s shares sank Wednesday after the avocado grower's fiscal second-quarter earnings came in well below market expectations.
CEO Lee E. Cole said that Calavo's performance will improve measurably in the second half of the year as supply and market demand improves. He also said the company is adding some new unnamed "blue-chip" customers in its grocery and foodservice categories that should improve sales.
The company, based in Santa Paula, Calif., has been investing heavily to promote its fresh avocado business. So while its revenue rose for the period, its profit shrank on these costs. The efforts appear to be paying off to some degree though as Calavo sold 40 percent more fresh avocado units in the quarter, while sales in the fresh avocado market overall fell.
Calavo reported net income of $2.2 million, or 15 cents per share, for the quarter that ended April 30, down from $2.5 million, or 17 cents per share, in the same quarter last year.
Its revenue increased nearly 20 percent to $166.3 million from $139 million.
Analysts polled by FactSet were anticipating higher earnings of 37 cents per share on revenue of $163.7 million.
The company's shares fell 89 cents, about 3 percent, to $29.20 in afternoon trading. Its stock has traded in a 52-week range of $21.63 to $32.56.