Posted on 11/22/2004 8:43:00 AM PST by Tumbleweed_Connection
Shares of Krispy Kreme Doughnuts Inc.'s fell sharply Monday as a 79 percent plunge in third quarter earnings and an intensifying accounting investigation overshadowed the pastry maker's statement that the low-carb craze might be easing. The Winston-Salem-based company also withdrew its sales forecast and said it would not provide an outlook for the current quarter and 2005.
Losses for the quarter were $3 million, or 5 cents per share, from a profit of $14.5 million, or 23 cents per share, a year ago. Excluding the one-time charges related to discontinued operations, the company earned $2.4 million, or 4 cents per share, in the latest quarter.
Analysts surveyed by Thomson First Call had expected Krispy Kreme to earns 13 cents per share.
In late morning trading, Krispy Kreme shares were down $1.96, or 17 percent, at $9.54 on the New York Stock Exchange. The shares are off more than 70 percent since the beginning of the year.
"Clearly we are disappointed with our third quarter results," chairman and chief executive officer Scott Livengood said in a statement. "We are focused on addressing the challenges facing the company and regaining our business momentum."
Those challenges include a federal investigation into its accounting practices. The company said earlier this year that the Securities and Exchange Commission was looking into its franchise reacquisitions and its future earnings outlooks.
Krispy Kreme said Monday that it incurred about $3 million in fees during the third quarter from the SEC probe and related matters, and expects more such expenses going forward.
The company also said it has set aside $2 million to deal with potential expenses related to accounting issues involving two franchisees.
On a conference call with analysts, Livengood said the low-carb dieting phenomenon is still a factor in the company's soft sales, but he believes the trend might have peaked. Krispy Kreme had previously blamed the diet for much of its sales difficulties this year.
He declined to answer any questions during the call, citing the pending investigations. Instead, the company said it would post answers to questions submitted by analysts on its Web site.
Total sales for the quarter ended Oct. 31 increased 1.4 percent to $170.1 million from $167.8 million in the third quarter of last year. Company store sales overall were up 9.6 percent to $121.2 million, though sales at company stores open at least one year fell 6.2 percent.
Fifteen new Krispy Kreme stores - 13 factory stores and two satellites - opened during the quarter. Nine stores, comprised of seven stores and two satellites, were closed.
That brought the number of stores systemwide at quarter-end to 429.
The company's net loss for the first nine months was $21.7 million, or 34 cents per share, on sales of $531.9 million, compared with net income of $40.7 million, or 66 cents per share, on sales of $475.6 million in the year-ago period.
that, and the massive fraud going on at KK.
I think it's the carb diet thingy. As far as KK is concerned people are saying - been there, done that. Pass the cheese please.
From the October 29 Boston Globe:
Company contributions and PAC money:
Dunkin Donuts 89% to Republican causes.
Krispy Kreme 98% to Republican causes.
Caribou Coffee 95% to Democrat causes.
Starbucks slightly more than half to Republican causes.
LOL, you're right about that one. I've still got that big toenail that I dropped the floor buffer on years ago that has grown back in a little, "funny". Yup - same old toes.
Wife sent me to the store yesterday for some KK donuts. Store (Kash and Carry I75 & SR70) had discontinued carrying them due to 'poor performance' by KK
So the media is now after Big Doughnut?
Krispy Kremes can blame Atkins all they want. The fact is, they expanded too quickly and now they're paying the price.
Well the drop in sales isn't because of me.....sadly!
Shipley's donuts are better!
Well that does it. I'll be heading to Krispy Kreme on Person St at 2AM when the fresh ones roll off. CD, want to make the drive and help out a good cause? Namely helping KK?
What I don't understand is that KK has expanded all over the country, and in Raleigh there are ONE! One downtown, far from where people actually live! In the South, FGS. I mean we were raised on them!
I was referring to the KK fad. You can get them everywhere now - including grocery stores. I'm dating myself, but I remember when Coors beer could not be had here. People would bring cases back from Colorado in the trunks of their cars. We thought it was great. Then Coors became available and I stopped drinking it - realized that it wasn't as good as I thought. Same way with the KK's.
Maybe they need to charge the kids who just stand and watch the donuts being made...
Up in Ohio, Krispy Kreme closed about 75% of their stores and chose a distrubtion model of using convenience stores and gas stations as outlets.
And now they say that their sales are down? Duh. If they do elsewhere what they've done in Ohio, I'm surprised they're still in business at all.
"Bunch of cops must have been on strike."
I got news that will absolutely astound you. When I was a cop, I wasn't charged for most of those donuts!
Okay, you can pick yourself off the floor now. :-)
Its not my fault...
LOL! "Officer, I may have been thoughtlessly speeding, but I had a reason to get home quickly. While I'm getting my driver's license and proof of insurance out, would you hold this big open box of Krisy Kreme donuts for me?"
I dare you to eat a dripping, hot Krispy Kreme donut when the "Fresh/Now" sign is on and tell me that Dunkin' Donuts is better.
There is NO comparison IMO. :-D
Price is the big issue. KK has single-handedly ruined the "dollar to a donut" bet!
i have SPIT OUT a KK donut, i can't stand the taste of whatever grease it is they cook them in. KK are gross IMO. period.
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