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Krispy Kreme Reports First-Quarter Loss

May 25, 2004 | AP

Doughnut maker Krispy Kreme reported its first quarterly loss since going public in 2000 after warning earlier this month that low-carb diets were hurting its results.

The Winston-Salem-based chain said Tuesday it lost $24.4 million, or 38 cents a share, for its first fiscal quarter ended May 2, in contrast to a profit of $13.1 million, or 22 cents a share, a year ago.

The latest results reflected charges for its pending divestment of Montana Mills Bread Co. and for store closings.

Total sales rose 24 percent to $184.4 million from $148.7 million a year ago. Systemwide sales at stores open at least a year increased 4 percent, while sales at company stores open a year rose 5.2 percent.

In early May, Krispy Kreme lowered its earnings forecast for the rest of the year, saying it was being hurt by low-carbohydrate diets such as the Atkins and South Beach plans.

The first quarter earnings included an asset impairment charge of 7 cents per share for seven stores that had closed or were scheduled to close, the company said. The company also reported a loss from discontinued operations of approximately $34.3 million, or 54 cents per share, for the planned divestiture of the existing Montana Mills operation.

Excluding the nonrecurring charges, earnings were 23 cents a share, which matched the average analyst estimate compiled by research firm Thomson First Call.

"In spite of the changing industry dynamics, we delivered 24 percent systemwide sales and revenue growth for the quarter," said Scott Livengood, chairman, and chief executive. "We are focused on our core business and improving company store operations. We remain excited about our growth prospects, both domestically and internationally."

The company now expects to earn between $1.04 and $1.06 per share in fiscal 2005, saying systemwide comparable store sales growth will be in the "low- to mid-single digits."

Krispy Kreme also has revised its fiscal 2005 development plans and it now estimates opening approximately 100 new stores systemwide.

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