Krispy Kreme loss widens in first quarter

by Eric Schroeder
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WINSTON-SALEM, N.C. — Krispy Kreme Doughnuts, Inc. sustained a loss of $7,398,000 in the first quarter ended April 29, which compared with a loss of $6,042,000 in the first quarter of fiscal 2007. The loss for the most recent quarter includes a charge of $9,600,000 representing a prepayment fee and the write-off of deferred financing costs related to long-term debt refinanced during the quarter. The company also received a $14.9 million credit due to the decrease in the fair value of securities it issued in connection with the settlement of litigation.

Sales for the quarter were $110,918,000, down 7% from $119,365,000.

System-wide sales for Krispy Kreme fell about 3% in the first quarter, while system-wide average weekly sales per store decreased about 1.5% to $39,300 per store. Company stores average weekly sales, meanwhile, increased 3% to about $55,300 per store.

"While Krispy Kreme still faces some longstanding challenges, we continue to advance the turnaround," said Daryl Brewster, president and chief executive officer of Krispy Kreme. "During the quarter, we improved our average weekly sales per company store and slowed the decline in system-wide sales. We refinanced our credit facilities to achieve cost savings. We reduced special professional fees and made progress in reducing other general and administrative costs. Our international franchisees continued to show significant growth. We also took steps to reevaluate elements of the business, which resulted in recording impairment charges of $12.7 million to write down certain assets."

During the first quarter of 2008, Krispy Kreme opened nine factory stores and four satellites. The company closed four factory stores during the quarter. In total, Krispy Kreme now operates 301 factory stores and 103 satellites.

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