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Krispy Kreme Doughnuts Fiscal 1Q Profit Declines

The Associated Press

WINSTON-SALEM, N.C. (AP) — Krispy Kreme Doughnuts Inc. said Thursday its fiscal first-quarter earnings dropped 54 percent on a 10 percent decline in sales and hefty costs to terminate leases.

The doughnut retailer's profit declined to $1.9 million, or 3 cents per share, from $4 million, or 6 cents per share, a year earlier.

Revenue slipped to $93.4 million from $103.6 million last year.

Same-store sales, or sales at stores open at least one year, rose 2.1 percent.

Chief Executive Jim Morgan said $2.4 million in lease termination costs and $1.1 million in charges to amend credit facilities weighed down results. In April, Krispy Kreme amended the facility to relax its interest coverage covenant over the next two fiscal years.

The company said it is concentrating on marketing to prepare for the summer, which is typically a slower period. Krispy Kreme is focusing on mini-doughnuts, iced beverages and Kool Kreme soft serve.

During the quarter, Krispy Kreme used cash to pay down debt, but still finished the quarter with $21 million in cash.

Shares of the company declined 25 cents, or 6.1 percent, to $3.88 in midday trading.