Krispy Kreme Posts Loss, Stock Off 16 Pct...

[Zim Hosein]

LOS ANGELES (Reuters) - Krispy Kreme Doughnuts Inc. (KKD.N: Quote, Profile, Research) on Monday reported a quarterly loss due to store closings and sluggish sales, sending its stock down 16 percent.

The company, which the Securities and Exchange Commission is investigating for accounting irregularities, also withdrew its previous forecast and declined to give an earnings or sales outlook.

Krispy Kreme posted a net loss of $3 million, or 5 cents per share, for the third quarter ended Oct. 31, compared with a profit of $14.5 million, or 23 cents per share, a year earlier.

"We only see negatives in the Krispy Kreme earnings release this morning," J.P. Morgan analyst John Ivankoe, who has an "underweight" rating on the company's shares, said in a report. "We don't view current earnings or cash valuation as compelling from either a public or private investor perspective."

Krispy Kreme's troubles first surfaced in May, when the company posted its first quarterly loss and cut the number of planned new stores. It blamed the low-carb diet craze for curbing its results.

Some investors have also said company expanded too quickly and that its doughnuts lost some of their cache once they were sold in places like supermarkets and convenience stores.

On a conference call with Wall Street analysts, Krispy Kreme Chief Executive Scott Livengood reiterated the company's view that increased consumer interest in healthier foods was taking its toll on sales of Krispy Kreme doughnuts.

"There is a group of consumers who have altered their purchasing habits because of dietary concerns," he said.

In a departure from the company's usual practices, Livengood declined to take analysts' questions on the call, citing the "need for prudent restraint" during the continuing probe by the U.S. Securities and Exchange Commission.

The Winston-Salem, North Carolina-based company will post answers to e-mailed questions on its Web site later on Monday.

Krispy Kreme has lost more than 80 percent of its market value since its stock hit a lifetime high of $49.74 in August 2003.

During the quarter, the company recorded charges to write down the value of closed stores, and store closing costs, mostly related to shutting four factory stores, of about $5.5 million.
Excluding charges, Krispy Kreme said it earned 4 cents per share from continuing operations. Wall Street analysts had expected 13 cents a share, according to Reuters Estimates.

Systemwide sales rose 4.7 percent, helped by strong sales at stores opened in the last 12 months. Sales at stores open at least 18 months, a key retail measure, fell 6.4 percent.

Krispy Kreme said it spent about $3 million on professional fees related to the U.S. Securities and Exchange Commission's probe of its accounting for repurchased franchises. Future costs for the investigation are expected to be material.

Krispy Kreme shares were down $1.85 to $9.65 in morning trade on the New York Stock Exchange. The stock hit a 52-week low of $9.37 earlier in the session.

(Additional reporting by Brad Dorfman in Chicago and Belinda Goldsmith in New York)

© Reuters 2004. All Rights Reserved.

Krispy Kreme Posts Loss, Stock Off 16 Pct 🙁

 

[Francodman]

what is this, f'n stock market watch day?

 

[GasX]

so, buy more if you like the stock...

 

[Zim Hosein]

Originally posted by: Francodman
what is this, f'n stock market watch day?

Yes! 😛

 

[DaveSimmons]

That's why I invest in mutual funds instead of individual stocks, primarily index funds like Vanguard's VFINX S&P 500 fund.

Then I don't have to stress over any particular stock's performance, or try to time when to buy or sell.

 

[aswedc]

🙁

Krispy Kreme often gives me fresh doughnuts for free...

 

[Homerboy]

Atkins crushed them

 

[TheAudit]

Originally posted by: Homerboy
Atkins crushed them

Damn you, Atkins!!
I remember when Krispy Kreme was riding high. The stock was doing well and they were expanding, putting stores everywhere.

 

[Deeko]

I hate Krispy Kreme.

Seriously there are so many better donut places out there its amazing anyone eats that garbage.

 

[jinglingxl]

Last time I read something in the papers, that KK's sluggish sales has something to do with the new invasion of Japanese Cream Puff stores opening up in the states. I happened to had some of those in Manhattan, and it'sss gooood ! 😛

 

[TheAudit]

Originally posted by: jinglingxl
Last time I read something in the papers, that KK's sluggish sales has something to do with the new invasion of Japanese Cream Puff stores opening up in the states. I happened to had some of those in Manhattan, and it'sss gooood ! 😛

I had read that as well.
Personally, like Deeko, I'm not a big fan of Krispy Kreme. I never figured out what all the hoopla was about, doesn't taste all that great to me.

 

[Kalvin00]

Originally posted by: TheAudit

Personally, like Deeko, I'm not a big fan of Krispy Kreme. I never figured out what all the hoopla was about, doesn't taste all that great to me.

Same for me.

 

[Gibson486]

Originally posted by: TheAudit

Originally posted by: jinglingxl
Last time I read something in the papers, that KK's sluggish sales has something to do with the new invasion of Japanese Cream Puff stores opening up in the states. I happened to had some of those in Manhattan, and it'sss gooood ! 😛

I had read that as well.
Personally, like Deeko, I'm not a big fan of Krispy Kreme. I never figured out what all the hoopla was about, doesn't taste all that great to me.

yeah, their flagship donut makes me wanna puke....it's just too sweet. It's also smaller than the competitions.

 

[Deeko]

Any of you have Giant food stores near you?

Get a Giant donut...preferably at like 7am right when they go out.

Best donut you will ever eat.

 

[Rudee]

Krispy Kreme doughnuts is kind of like smoking hash in Amsterdam. Once it became readily available to the masses, the mystique quickly diminished, and it lost it's appeal.

Reality TV will be the next victim of the "too much, too quickly" phenomenon, and I can hardly wait.

 

[Stifko]

Originally posted by: Gibson486

Originally posted by: TheAudit

Originally posted by: jinglingxl
Last time I read something in the papers, that KK's sluggish sales has something to do with the new invasion of Japanese Cream Puff stores opening up in the states. I happened to had some of those in Manhattan, and it'sss gooood ! 😛

I had read that as well.
Personally, like Deeko, I'm not a big fan of Krispy Kreme. I never figured out what all the hoopla was about, doesn't taste all that great to me.

yeah, their flagship donut makes me wanna puke....it's just too sweet. It's also smaller than the competitions.

Krispy Kreme donuts are small and way too sweet. I am not a bog fan either obviously.

 

[maziwanka]

krispy kreme sucks

 

[Grey]

Originally posted by: maziwanka
krispy kreme sucks