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Krispy Kreme sinks 12% on disappointing profit

6:38 PM, Aug 29, 2013   |    comments
Investors were disappointed by Krispy Kreme's second quarter earnings. (Photo: PR Newswire)
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WINSTON-SALEM, N.C. (AP) -- Krispy Kreme Doughnuts left a bad taste in investor's mouths Thursday.

The doughnut chain's shares sank sharply in after-hours trading after it reported a disappointing fiscal second-quarter profit and weak outlook.

Krispy Kreme's net income slipped to $4.7 million, or 7 cents per share, for the quarter that ended Aug. 4. That's down from $4.9 million, or 7 cents per share, in the second quarter last year. After adjusting for losses on refinancing of debt and other special items, it earned 14 cents per share, compared with 12 cents per share a year ago.

The company said it also was weighed down by losses on derivative positions.

Revenue for the period increased more than 10% to $112.7 million from $102.1 million as more customers came to its restaurants and profit margins improved.

Analysts polled by FactSet were anticipating earnings of 16 cents per share on revenue of $111.9 million.

Krispy Kreme's revenue from stores open at least a year increased 10%. This is considered a key indicator of financial performance as it strips away the impact of recently opened or closed sites.

The company also noted that it is pleased with the initial sales and operating results from its five new small factories it has opened in 2013. Company Chairman, President and CEO James Morgan said that the company is now sufficiently confident about this new smaller and more efficient model. The company plans to open four to five small factories in the rest of its fiscal year.

Krispy Kreme reiterated its full-year forecast of earnings between 59 to 63 cents per share. Analysts had expected 64 cents per share.

Shares of the Winston-Salem, N.C.-based company fell $2.83, nearly 12%, to $20.40 in after-hours trading following the report. Its stock price has tripled over the past year as of closing of regular trading Thursday.

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