Krispy Kreme Profit Rises 20%

By Tess Stynes 

Krispy Kreme Doughnuts Inc. said its earnings rose 20% in the third quarter, as limited-time offers and promotions helped boost customer traffic.

However, the doughnut chain's shares fell 4% to $19.40 in recent after-hours trading as earnings excluding one-time items and revenue missed analysts' expectations.

Winston-Salem, N.C.-based Krispy Kreme's shares often swing wildly after earnings reports, as investor reaction to any surprise to the company's bottom-line performance can be intense.

The company's revenue has mostly been rising of late. The company also has been expanding its presence abroad and has made forays into grocery shelves this year with the launch of bottled iced coffee, sold at Wal-Mart Stores Inc., and a K-Cup partnership with Green Mountain Coffee Roasters Inc.

Chief Executive Tony Thompson, who took the helm of Krispy Kreme in June, said that the company increased store traffic during the latest quarter through limited-time offers and other promotional and marketing incentives.

During the quarter, Krispy Kreme's efforts included a "Ghostbusters"-themed doughnut promotion with Sony Corp. tied into the Blu-ray release of the 30th anniversary edition of the supernatural comedy.

For the current quarter, Mr. Thompson said the company is "working to balance top line growth with improved shop operating margins." Plans include the limited roll out of a new loyalty program called "My Krispy Kreme Treats," followed by a domestic roll out planned for later next year, he added.

Systemwide sales at domestic stores open at least 18 months rose 3.7%, as 3.3% growth at company-owned shops offset a decline of 2.9% at international franchise stores, excluding currency effects. Systemwide store count rose 4.6%.

For the period ended Nov. 2, Krispy Kreme reported a profit of $8.1 million, or 12 cents a share, up from $6.8 million, or nine cents a share, a year earlier. Excluding items such as a provision for deferred taxes, earnings rose to 18 cents from 16 cents. Revenue increased 7.6% to $122.9 million.

Analysts polled by Thomson Reuters expected per-share profit of 19 cents and revenue of $124 million.

Krispy Kreme also affirmed its profit outlook for the business year ending in January.

Write to Tess Stynes at [e-mail]

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