Krispy Kreme Net Income Rockets 47%


Thursday, August 21st 2003, 12:00 am
By: News On 6



CHARLOTTE, N.C. (AP) _ Krispy Kreme Doughnuts Inc. said second quarter profits rose 47 percent, surpassing Wall Street's estimates, led by sales from company-owned stores.

For the quarter ended Aug. 3, Krispy Kreme earned $13 million, or 21 cents per share, compared with $8.9 million, or 15 cents per share, in the second quarter of 2002. That beat the consensus estimate of analysts surveyed by research firm Thomson First Call by a penny.

``It's been an extremely exciting quarter, during which we reached several milestones,'' chairman and president Scott Livengood told analysts. ``In many cases, we were able to meet and sometimes exceed expectations.

``These second-quarter results provide a strong foundation for the balance of the year,'' he added.

Revenues for the Winston-Salem-based company increased 41 percent to $161.8 million, compared with $114.6 million last year. Sales from the company stores increased 40 percent to $104.3 million and revenue from franchise operations grew 25 percent to $6 million.

``We experienced great success when we opened our first store outside North America in Sydney, Australia,'' Livengood said. ``Finally, we served the first-ever Krispy Kreme doughnuts in a French-speaking environment in Montreal, Canada, and were met with great excitement when we opened there in May.''

Despite the strong results, shares of Krispy Kreme lost ground Thursday on the New York Stock Exchange. Shares fell more than 4 percent, or $2.06, to $46.86.

On Wednesday, Maxim Group downgraded the stock from buy to hold. Analyst Kathleen Heaney told Dow Jones Newswires the downgrade was based strictly on the share price, which was nearing her 12-month target of $50 to $52.

The Wall Street Journal also ran an article Thursday that questioned whether Krispy Kreme's stock was ``vastly overvalued.''

For the first half of the year, net income grew 48 percent to $26.1 million, or 43 cents per share, from $17.7 million, or 30 cents per share, in the same period last year. Company sales increased 38 percent to $310.5 million, compared with $225.7 million for the same period a year ago.

During the quarter, 22 new Krispy Kreme stores were opened in twelve new markets. The new outlets included the ones in Australia and Canada as well as a commissary in London. The company also added stores in Texas, Rhode Island, South Dakota, Indiana, Michigan, Pennsylvania, New Jersey and Oregon.

The store that opened in Medford, Mass., a Boston suburb, set a new opening week sales record of $506,917, the company said.

Founded in 1937, Krispy Kreme operates 307 stores. An estimated 7.5 million Krispy Kreme doughnuts are made every day and more than 2.7 billion are produced each year.