Donut mix, shortening weigh on Krispy Kreme earnings

by Staff
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WINSTON-SALEM, N.C. — Higher costs for donut mix and shortening coupled with higher gasoline prices contributed to a wider third-quarter loss at Krispy Kreme Doughnuts, Inc. than a year earlier. In the third quarter ended Nov. 2, Krispy Kreme sustained a loss of $5,885,000, which compared with a loss of $798,000 in the same period a year ago.

Sales for the quarter were $94,338,000, down from $103,355,000. Krispy Kreme said the decline reflected decreases in company stores and KK supply chain revenues, partially offset by an increase in franchise revenues.

During the third quarter, Krispy Kreme opened 37 new stores and closed 22, bringing the total number of stores systemwide to 509.

"Our third-quarter performance was impacted by a challenging operating climate led by high gas prices, as well as our commitment to investing in our growth plan," said Jim Morgan, chairman, president and chief executive officer. "We have undertaken key strategic initiatives to strengthen our business as well as the economics of our stores, and that should help us succeed through various economic cycles and deliver positive long-term results."

For the nine months ended Nov. 2, Krispy Kreme had a net loss of $3,758,000, which compared with a loss of $35,236,000 in the same period a year ago. Net sales in the first nine months were $292,216,000, down from $318,371,000.

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