Krispy Kreme Surges on Earnings Beat
(Krispy Kreme earnings report updated with additional detail.)
WINSTON-SALEM, N.C. (
) --
Krispy Kreme Doughnut
(KKD)
shares surged Thursday morning after the donut shop operator posted far better-than-expected quarterly results and raised its 2011 outlook after the closing bell Wednesday.
|
Krispy Kreme said it booked net profits of $2.4 million, or 3 cents per share, in its fiscal third quarter, ended Oct. 31. In the third quarter last year Krispy Kreme posted a loss of $2.4 million, or 4 cents loss per share.
Quarterly revenue came in at $90.2 million, 7.9% higher than year-earlier sales of $83.6 million.
>> Restaurant Stocks: Earnings to Watch
Both top- and bottom-line results topped Wall Street's expectations. Analysts' consensus call had been for earnings of $100,000, or zero cents per share, on revenue of $87.8 million.
>> Krispy Kreme Gains Ahead of Earnings
Krispy Kreme shares jumped 18.7% ahead of midday Thursday. The stock traded around $7.31. The
PowerShares Zacks Small Cap
(PZJ)
, an exchange-traded fund that counts Krispy Kreme shares as 0.4% of its portfolio, gained 0.3% Thursday morning.
"Higher sales by company and franchise shops drove profit improvements in the KK Supply Chain segment, and our International Franchise business continued to exceed our expectations," said CEO Jim Morgan.
Krispy Kreme said same-store sales -- or sales at stores open at least one year, a closely watched metric in the restaurant industry -- rose 5% in the recent quarter, the eighth consecutive quarterly increase.
The donut chain added a net increase of 16 stores in the quarter. As of Oct. 31 there were 85 company-owned Krispy Kreme stores and 564 franchised locations.
Krispy Kreme upped its outlook for fiscal 2011. It now expects operating income (EBIT), exclusive of impairment and lease termination costs, to be in a range of $17 million to $20 million. That's up from its prior outlook for full-year EBIT in a range of $13 million to $17 million. Analysts expect the restaurant operator to book EBIT of $16 million in fiscal 2011.
In 2012, Krispy Kreme expects to open 5 to 10 company stores, 5 to 15 domestic franchise stores, and more than 30 international franchise stores.
" We expect continued organic same store sales growth in our domestic stores, but believe international franchise same store sales will continue to be pressured by the substantial growth in international markets in recent years," Morgan said.
The CEO conceded that uncertainty of commodity costs are likely to grow, posing some hurdles to forecasting future operating results. "Accordingly, we are working to reduce the consumption of certain key ingredients, and are evaluating the timing and scope of price increases needed to offset higher input costs."
Krispy Kreme forecast 2012 EBIT to be in a range of $22 million to $24 million, an increase of 29% to 41% from the low end of its revised fiscal year 2011 guidance, and an increase of 10% to 20% from the top end of the fiscal 2011 range.
"It is important to note that this outlook is very preliminary, and we expect to establish more formal guidance in conjunction with the release of our fourth quarter results in April," Morgan added.
-- Written by Miriam Marcus Reimer in New York.
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