News
Krispy Kreme increases same-store sales 3.4 percent
June 3, 2010
Krispy Kreme Doughnuts Inc. has raised its earnings outlook for fiscal 2011 as a whole, the company reported in its financial results for the first quarter ended May 2, 2010.
Company same-store sales were up 3.4 percent, the sixth consecutive quarterly increase, and up over a 2.1 percent increase in the same period last year. Comps for domestic franchise stores were up 2.7 percent, compared to an increase of 2.4 percent in the same period last year.
Krispy Kreme did not fare as well overseas, although the decline slowed compared to last year. International franchise comps were down 7.7 percent, compared to a decline of 38.2 percent in the same period last year. In constant currency, those comps were down 17.6 percent, compared negative 24.6 percent in the same period last year.
Company off-premises sales were down 6.1 percent in the average weekly number of doors at grocers/mass merchants, while sales per door were up 11.4 percent. Off-premise sales in c-stores experienced a 10.2 percent decline in the average weekly number of doors, while the average weekly sales per door were down 1.9 percent.
Revenues were down 1.4 percent to $92.1 million, compared to $93.4 million in the same period last year. Excluding the effects of refranchising company stores, revenues rose 0.4 percent. Net income was up 136 percent at $4.5 million, or $0.06 per share diluted, compared to $1.9 million, or $0.03 per share diluted in the first quarter last year.
The company ended the first quarter of fiscal 2011 with a total of 616 Krispy Kreme stores systemwide, a net increase of 34 locations since Jan. 31, 2010. As of May 2, there were 83 company stores and 533 franchise locations.
"We were pleased with the improvement in our first quarter performance, which included healthy company same-store sales growth and improvements in both consolidated operating income and net income compared to the year-ago period," said Jim Morgan, the company's president and CEO. "This improvement reflects our continued progress in implementing our strategic initiatives. We look forward to continued success with our transition and believe that our shareholders will increasingly be positioned to benefit as we move forward."
Fiscal 2011 outlook
"In our fiscal 2010 fourth quarter earnings release on April 15, we indicated that we expected operating income, exclusive of impairment charges and lease termination costs, to range from $10 million to $13 million for fiscal 2011. Based on our results for the first quarter, which exceeded our expectations, and other current information, we are raising that outlook. We currently estimate that fiscal 2011 operating income, exclusive of impairment charges and lease termination costs, will range from $11 million to $15 million. As part of this outlook, we continue to believe the total domestic store count will increase for the first time since 2005," Morgan said.
The company reported that in each of the last three fiscal years, the first quarter has been the strongest quarter of the year in terms of operating income exclusive of charges.
"As we stated in April, we view fiscal 2011 as a period of continued investment in our business and execution of our strategic plan. We are working diligently to further improve company operations while providing better support for our franchise partners both domestically and internationally. These efforts are critical to building a strong foundation for our business and should position us for accelerated growth in both revenues and earnings over the long-term," Morgan concluded. "We believe that we are only beginning to unlock the potential of the Krispy Kreme brand for our guests, customers, franchisees, team members and shareholders."
Conference call
A replay a management's conference will be available by dialing (888) 203-1112 and entering the passcode 3497079. International callers may access the replay by dialing (719) 457-0820 and entering passcode 3497079. The audio replay will be available through June 10, 2010. A transcript of the conference call also will be available at the company's website.
Correction: The original headline incorrectly stated the same-store sales increase percentage. The current headline is correct.
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