Peets Coffee & Tea (PEET) 8-K Peet’s Coffee & Tea, Inc. Reports Third Quarter 2009 Results, Raises 2009 Earnings Guidance and Gives Outlook for Fiscal 2010

Exhibit 99.1

Media Contact: Lee Caraher Double Forte 415.848.8102 lcaraher@double-forte.com Investor Contact: Seanna Allen Peet’s Coffee & Tea, Inc. 510.594.2196 investorrelations@peets.com

PEET’S COFFEE & TEA, INC. REPORTS THIRD QUARTER 2009 RESULTS, RAISES 2009 EARNINGS GUIDANCE AND GIVES OUTLOOK FOR FISCAL 2010

EMERYVILLE, Calif. – October 27, 2009 - Peet’s Coffee & Tea, Inc. (NASDAQ: PEET) today announced its third quarter 2009 results for the period ended September 27, 2009, which included 13 weeks.

In this release, the company:

· Reports third quarter diluted earnings per share of $0.19, an increase of 27% versus last year

· Reports net revenue of $73.9 million, an increase of 8% versus last year

· Raises guidance for diluted earnings per share expectations for the full year to $1.04 to $1.06, up from the previous range of $0.97 to $1.00

· Gives guidance for 2010 of diluted earnings per share of $1.24 to $1.30.

For the 13 weeks ended September 27, 2009, net revenue increased 8% to $73.9 million from $68.5 million for the corresponding period last year.

Net income for the quarter was $2.5 million, or $0.19 per diluted share, compared to $2.0 million, or $0.15 per diluted share, for the corresponding period last year.

“I’m very pleased with our performance,” said Patrick O’Dea, CEO and president of Peet's Coffee & Tea. “We are leveraging the significant past investments we’ve made in our people, direct store delivery (DSD) selling system, the new roasting facility and our store base to produce strong earnings growth. While continuing to grow the Peet’s brand, we will add new growth initiatives, such as the current national launch of Godiva flavored coffees, that are consistent with our overall vision to be the leading premium specialty coffee company in all key consumer segments. This strategy should enable us to deliver strong profit growth into the future.”

Financial and Operating Summary

Retail net revenue increased 4% to $47.9 million for the 13 weeks ended September 27, 2009 from $45.9 million for the corresponding period last year. The increase was attributed to new retail stores opened in the last 12 months. The company opened three new retail locations in the quarter for a total of seven year to date.  The company expects to open one additional store this year.

Specialty net revenue increased 15% to $26.0 million compared to $22.6 million for the corresponding period last year.  Within the specialty business, grocery sales grew 24%, foodservice and office was up 13%, and home delivery sales were down 8% compared to the same period last year.

Cost of sales and related occupancy costs decreased as a percentage of net revenue to 46.4%, compared to 47.1% for the corresponding period last year.  The decrease from last year was due to lower shipping costs, lower milk costs, effective cost controls in retail stores, and higher prices in retail, partially offset by higher coffee costs.

Operating expenses decreased as a percentage of net revenue to 35.3%, compared to 36.1% for the corresponding period last year.  The decrease was primarily due to effective cost management in the retail business and the leveraging of both retail and grocery overhead costs.

General and administrative expenses increased to $5.8 million compared to $5.2 million for the same period last year driven primarily by higher payroll-related costs and higher professional service fees.

Depreciation and amortization expenses increased to $4.0 million compared to $3.2 million for the corresponding period last year. The increase was primarily due to the opening of 14 new retail stores in the last 12 months and the implementation of an enterprise resource planning (ERP) system during the quarter.

Fiscal 2009 Full Year Outlook

Looking ahead, Peet’s raised its earnings guidance for the year based on current results:

· Diluted earnings per share are now expected to be in the $1.04 to $1.06 range for the 53 weeks ending January 3, 2010.  This is an increase from prior guidance of $0.97 to $1.00

· Fiscal 2009 net revenue growth is expected to be between 8% and 9% for the 53 weeks ending January 3, 2010.

Fiscal 2010 Outlook

Looking ahead, Peet’s provided the following fiscal 2010 guidance:

· Total net revenue is expected to grow 8% to 12% on a comparable 52 week basis

· Diluted earnings per share are expected to be in the $1.24 to $1.30 range which would translate to 20% to 25% growth on a comparable 52 week basis.

Peet’s Coffee & Tea, Inc. Q3 2009 Conference Call

The company will host a conference call beginning at 2:00 p.m. PT 5:00 p.m. ET on October 27, 2009, which can be accessed by calling 1-877-397-0272.  The call will be simultaneously webcast on Peet’s Web site at www.peets.com.

A replay of the teleconference will be available from 5:00 p.m. PT/8:00 p.m. ET on October 27, 2009 through 8:59 p.m. PT/11:59 p.m. ET on November 3, 2009,at 1-888-203-1112or 1-719-457-0820,using access code 7832405. It will also be archived at http://investor.peets.com/medialist.cfm through October 27, 2010, at 8:59 p.m. PT/11:59 p.m. ET.

ABOUT PEET’S COFFEE & TEA, INC.

Peet's Coffee & Tea, Inc., (PEET), is the premier specialty coffee and tea company in the United States.  Founded in 1966 in Berkeley, California by Alfred Peet, an early tea authority who became widely recognized as the grandfather of specialty coffee in the U.S., Peet’s offers superior quality coffees and teas in multiple forms, by sourcing the best quality coffee beans and tea leaves in the world, adhering to strict high quality and taste standards, and controlling product quality though its unique direct store delivery selling and merchandising system.  Peet's is committed to strategically growing its business through many channels while maintaining the extraordinary quality of its coffees and teas. For more information about Peet's Coffee & Tea, Inc. visit www.peets.com.

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This press release contains statements that are not based on historical fact and are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements include statements relating to 2009 and 2010 forecasted net revenue and earnings per diluted share. Forward-looking statements are based on management’s beliefs, as well as assumptions made by and information currently available to management, including financial and operational information, the company’s stock price volatility, and current competitive conditions.  As a result, these statements are subject to various risks and uncertainties.  The company’s actual results could differ materially from those set forth in forward-looking statements depending on a variety of factors including, but not limited to, general economic conditions, including the current recession and its ongoing negative impact on consumer spending, the company’s ability to implement its business strategy, attract and retain customers, and obtain and expand its market presence in new geographic regions; the availability and cost of high quality Arabica coffee beans; consumers’ tastes and preferences; complaints or claims by current, former or prospective employees or government agencies; and competition in its market as well as other risk factors as described more fully in the company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 28, 2008.  These factors may not be exhaustive.  The company operates in a continually changing business environment, and new risks emerge from time to time.  Any forward-looking statements speak only as of the date of this press release.

PEET’S COFFEE & TEA, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except share amounts)

	September 27,		December 28,
	2009		2008
ASSETS
Current assets
Cash and cash equivalents	$	16,966	$	4,719
Short-term marketable securities		4,232		8,600
Accounts receivable, net		10,682		11,924
Inventories		30,564		26,124
Deferred income taxes - current		2,907		2,922
Prepaid expenses and other		8,029		7,193
Total current assets		73,380		61,482
Property, plant and equipment, net		106,900		107,914
Deferred income taxes - non current		3,146		3,059
Other assets, net		2,764		3,897
Total assets	$	186,190	$	176,352
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and other accrued liabilities	$	8,811	$	9,858
Accrued compensation and benefits		9,568		8,852
Deferred revenue		4,759		6,350
Total current liabilities		23,138		25,060
Deferred lease credits		7,264		6,645
Other long-term liabilities		950		740
Total liabilities		31,352		32,445
Shareholders' equity
Common stock, no par value; authorized 50,000,000 shares;
issued and outstanding:12,983,000 and 13,174,000 shares		88,320		90,123
Accumulated other comprehensive income		3,838		34
Retained earnings		62,680		53,750
Total shareholders' equity		154,838		143,907
Total liabilities and shareholders' equity	$	186,190	$	176,352

PEET’S COFFEE & TEA, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, in thousands, except per share amounts)

	Thirteen weeks ended					Thirty-nine weeks ended
	September 27,			September 28,		September 27,		September 28,
	2009			2008		2009		2008
Retail stores	$	47,863		$	45,911	$	144,686	$	136,829
Specialty sales		26,042			22,575		74,889		68,847
Net revenue		73,905			68,486		219,575		205,676
Cost of sales and related occupancy expenses		34,291			32,249		99,812		96,478
Operating expenses		26,052			24,715		76,804		72,934
General and administrative expenses		5,770			5,237		17,782		16,233
Depreciation and amortization expenses		3,962			3,150		11,200		9,395
Total costs and expenses from operations		70,075			65,351		205,598		195,040
Income from operations		3,830			3,135		13,977		10,636
Interest (expense) income, net		(15	)		130		111		636
Income before income taxes		3,815			3,265		14,088		11,272
Income tax provision		1,346			1,247		5,158		4,127
Net income	$	2,469		$	2,018	$	8,930	$	7,145
Net income per share:
Basic	$	0.19		$	0.15	$	0.69	$	0.52
Diluted	$	0.19		$	0.15	$	0.67	$	0.51
Shares used in calculation of net income per share:
Basic		12,976			13,603		12,977		13,825
Diluted		13,343			13,899		13,267		14,111

See notes to consolidated financial statements.

PEET’S COFFEE & TEA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Thirty-nine weeks ended
	September 27,			September 28,
	2009			2008
Cash flows from operating activities:
Net income	$	8,930		$	7,145
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		12,790			11,025
Amortization of interest purchased		36			157
Stock-based compensation		2,277			1,962
Excess tax benefit from exercise of stock options		(275	)		(384	)
Tax benefit from exercise of stock options		119			246
Loss on disposition of assets and asset impairment		184			216
Deferred income taxes		(72	)		366
Changes in other assets and liabilities:
Accounts receivable, net		1,242			(1,355	)
Inventories		(4,440	)		(5,215	)
Prepaid expenses and other current assets		(836	)		(5,521	)
Other assets		185			(81	)
Accounts payable, accrued liabilities and deferred revenue		(1,904	)		872
Deferred lease credits and other long-term liabilities		829			1,605
Net cash provided by operating activities		19,065			11,038
Cash flows from investing activities:
Purchases of property, plant and equipment		(11,908	)		(20,430	)
Proceeds from sales of property, plant and equipment		-			67
Changes in restricted investments		878			-
Proceeds from sales and maturities of marketable securities		8,507			5,597
Purchases of marketable securities		(371	)		(917	)
Net cash used in investing activities		(2,894	)		(15,683	)
Cash flows from financing activities:
Net proceeds from issuance of common stock		2,365			2,855
Purchase of common stock		(6,564	)		(10,017	)
Excess tax benefit from exercise of stock options		275			384
Net cash used in financing activities		(3,924	)		(6,778	)
Increase (decrease) in cash and cash equivalents		12,247			(11,423	)
Cash and cash equivalents, beginning of period		4,719			15,312
Cash and cash equivalents, end of period	$	16,966		$	3,889
Non-cash investing activities:
Capital expenditures incurred, but not yet paid	$	716		$	1,135
Other cash flow information:
Cash paid for income taxes		5,023			7,670

SEGMENT REPORTING

(Unaudited, dollars in thousands)

	Retail					Specialty					Unallocated			Total
			Percent					Percent								Percent
			of Net					of Net								of Net
	Amount		Revenue			Amount		Revenue						Amount		Revenue
For the thirteen weeks ended September 27, 2009
Net revenue	$	47,863		100.0	%	$	26,042		100.0	%				$	73,905		100.0	%
Cost of sales and occupancy		21,179		44.2	%		13,112		50.3	%					34,291		46.4	%
Operating expenses		20,488		42.8	%		5,564		21.4	%					26,052		35.3	%
Depreciation and amortization		2,907		6.1	%		463		1.8	%	$	592			3,962		5.4	%
Segment operating income		3,289		6.9	%		6,903		26.5	%		(6,362	)		3,830		5.2	%
For the thirteen weeks ended September 28, 2008
Net revenue	$	45,911		100.0	%	$	22,575		100.0	%				$	68,486		100.0	%
Cost of sales and occupancy		21,130		46.0	%		11,119		49.3	%					32,249		47.1	%
Operating expenses		19,940		43.4	%		4,775		21.2	%					24,715		36.1	%
Depreciation and amortization		2,357		5.1	%		372		1.6	%	$	421			3,150		4.6	%
Segment operating income		2,484		5.4	%		6,309		27.9	%		(5,658	)		3,135		4.6	%
For the thirty-nine weeks ended September 27, 2009
Net revenue	$	144,686		100.0	%	$	74,889		100.0	%				$	219,575		100.0	%
Cost of sales and occupancy		62,930		43.5	%		36,882		49.2	%					99,812		45.5	%
Operating expenses		60,417		41.8	%		16,387		21.9	%					76,804		35.0	%
Depreciation and amortization		8,449		5.8	%		1,325		1.8	%	$	1,426			11,200		5.1	%
Segment operating income		12,890		8.9	%		20,295		27.1	%		(19,208	)		13,977		6.4	%
For the thirty-nine weeks ended September 28, 2008
Net revenue	$	136,829		100.0	%	$	68,847		100.0	%				$	205,676		100.0	%
Cost of sales and occupancy		62,191		45.5	%		34,287		49.8	%					96,478		46.9	%
Operating expenses		58,791		43.0	%		14,143		20.5	%					72,934		35.5	%
Depreciation and amortization		7,244		5.3	%		1,029		1.5	%	$	1,122			9,395		4.6	%
Segment operating income		8,603		6.3	%		19,388		28.2	%		(17,355	)		10,636		5.2	%