Farmer Brothers Coffee Co. experienced a challenging second quarter fiscal 2026, marked by a decrease in net sales and a shift from net income to a net loss. Despite pressures from higher cost of goods sold and macroeconomic factors, the company maintained its gross margin above 35% and saw improvements in operating expenses.
Gross profit remained above 35% for the remainder of fiscal 2026, with Q2 FY2026 at 36.3%.
positiveOperating expenses decreased year-over-year, with a $700,000 decrease in general and administrative expenses.
positiveThe company is focused on growing top-line revenue and coffee pounds while strengthening its customer base.
neutralNet sales decreased by 1% to $88.9 million in Q2 FY2026 compared to the prior year period.
negativeGross profit decreased by $6.8 million to $32 million, and gross margin compressed by 6.8 percentage points to 36.3% in Q2 FY2026 compared to Q2 FY2025.
negativeThe company reported a net loss of $4.9 million in Q2 FY2026, a significant shift from a net income of $0.2 million in the prior year period.
negativeAdjusted EBITDA decreased substantially by 91.9% to $0.484 million in Q2 FY2026 compared to $5.9 million in Q2 FY2025.
negativeCash and cash equivalents decreased from $6.8 million at the end of FY2025 to $4.2 million as of December 31, 2025.
attentionNet cash used in operating activities was $5.8 million for the six months ended December 31, 2025.
negativeMargin expansion indicates improving profitability and operational efficiency. Measured in basis points (bps): 100 bps = 1.0%.
Special items are non-recurring events that may distort period-over-period comparisons. Analysts typically adjust for these when calculating normalized earnings.
As expected, the second quarter was a challenging one for Farmer Brothers.
We, however, continued to see year-over-year improvement in selling and general and administrative cost and our gross margin remained above 35%, where we expect it to be for the remainder of fiscal 2026.
Despite pressures related to higher cost of goods sold and current micro and macroeconomic pressures, we remain focused on growing top line revenue and coffee pounds as we strengthen our customer base.
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Operational metrics provide insight into business drivers and customer engagement beyond traditional financial measures.