News
Krispy Kreme net loss narrows in Q3
December 6, 2009
Krispy Kreme Doughnuts Inc. continues to improve its operations, according to financial results for the third quarter ended Nov. 1, 2009.
Same store sales at company-owned stores were up 5.1 percent, compared to a decline of 1.3 percent in the same period last year. The increase is part of a continued comps growth trend, with comps up 5.9 percent for Q2, 2.1 percent in Q1, and 0.9 percent in Q4 of last year.
Sales at off-premises locations where Kripsy Kreme donuts are sold were up 6.6 percent, compared to a decline of 9.1 percent in the same period last year. The number of off-premises locations where Kripsy Kreme donuts are sold was down 11.4 percent, compared to a decline of 7 percent in the same period last year.
Revenues were down 11 percent at $83.6 million, compared to $94.3 million in the same period last year. Year to date, revenues were down 11 percent at $259.8 million, compared to $292.2 million last year.
The net loss for the quarter was $2.4 million, an improvement of 59 percent compared to a net loss of $5.9 million in the same period last year. Last year's net loss reflected a non-operating charge of $900,000 related to a loan to a franchisee.
"Our results continued to improve year-over-year in the third quarter," said Jim Morgan, the company's president and CEO. "Our improved results are evidence of progress in implementing our strategic initiatives, which have us on a path toward building a growing, profitable business that is sustainable for the long term.
"There is still much work to be done to achieve our long-term goals of sustained revenue growth and consistent profitability, but we are pleased with the improvement in our financial results for the third quarter and year-to-date fiscal 2010. These results continue to reflect the efforts and dedication of our team members and franchisees. We believe that we have the right strategies, and that the benefits of their implementation will be more fully reflected in our financial results in the quarters and years ahead."
Third quarter highlights include:
- Small retail shop growth — Krispy Kreme opened two new company-owned small retail shops, bringing the total small shop openings to five for the year. Domestic franchisees opened two small retail shops during the quarter, one in Arizona and the other in Pennsylvania. Signed letters of intent for five additional small retail concept shop leases in Virginia and Tennessee.
- International franchise growth — The company awarded franchise development rights for Thailand and the Dominican Republic, a net increase of 15 locations in the quarter, including the first Krispy Kreme shop in Turkey, which opened in Istanbul.
- Franchisee support — Krispy Kreme hired personnel with substantial international supply chain experience to support international expansion. The company also introduced an expanded suite of store support tools for domestic franchisees, including integrated local, national and social marketing; on-line new store design support; and a pilot of new food cost management tools.
Management will host a conference call to review third quarter results today at 4:30 p.m. Eastern time. A live webcast of the conference call will be available at www.KrispyKreme.com. To access an archived audio replay of the call, dial (888) 203-1112 and enter the passcode 7863742. International callers may access the replay by dialing (719) 457-0820 and entering passcode 7863742. The audio replay will be available through Dec. 14.
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