By: Herb Greenberg | 12/03/13 - 11:09 AM EST
Compare that with CFO Doug Muir's comments on yesterday's call, when he said, "We look for low-single digit, organic same store sales price in our company stores. Strategic price increases would be incremental to that."Drill down into the exceptional data the company dishes up in its earnings release, and the trend is more disturbing at company-owned stores, whose revenue is almost equal to franchised stores: Average checks and customer counts tumbled. Reality: For the first time in a long time this was an unappetizing quarter for Krispy Kreme. Without price increases, same-store sales at company-owned stores would've been ever worse, which is noteworthy because earlier this year the company said it could turn in "low-to-mid" single-digit organic growth gains this year without pricing. Now it's talking about how "strategic prices increases" will be "incremental." Does that mean they will be levers to pull to keep sales from being even worse? Or does the most recent quarter, with a tumbling traffic count, suggest that Krispy Kreme customers are sensitive to pricing?
And what about that cannibalization? The company talks about it so matter-of-factly. But cannibalizing, which had been occurring in international markets, can be a sign of saturation. Saturation leads to slowdowns.
And never mind the honeymoon effect. On Wall Street, at least - and for now -- the honeymoon for Krispy Kreme appears to be over.
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