Krispy Kreme Crumbles, Raises Prices

WINSTON-SALEM, N.C. ( TheStreet) -- Krispy Kreme Doughnuts ( KKD) shares plunged Friday after the company disappointed investors with a quarterly loss as rising commodity costs ate into its bottom line.

Krispy Kreme said late Thursday that it implemented price increases last month to offset higher costs for food ingredients and fuel by an estimated $12 million. By the end of April those price increases will carry over to the chain's grocery and convenience store sales.


If customers are willing to pay those prices and costs are managed effectively, the company expects to earn between $22 million and $24 million in fiscal 2012, higher than the $21 million analysts were expecting.

Investors were not convinced, bidding Krispy Kreme shares 15.9% lower at midday Friday, off earlier lows, to $5.93. The stock traded amid heavier-than-normal volume with nearly 4 million shares in play less than halfway through the session, compared with their average daily volume of just 922,000.

Krispy Kreme, which competes with privately-held Dunkin' Donuts, booked a fourth-quarter loss of $1.5 million, or 2 cents per share, compared with a year-earlier profit of $500,000, or a penny per share.

Revenue rose 6% to $91.7 million.

Both top- and bottom-line results missed expectations. Analysts' consensus had been for Krispy Kreme to earn 4 cents per share on revenue of $92.6 million.

A number of food companies have recently reported that higher ingredient and commodity costs have pressured their results in recent quarters as global food prices continue to rise.


Companies including Hershey ( HSY), J.M. Smucker ( SJM), Panera Bread ( PNRA), McCormick ( MKC), ConAgra Foods ( CAG), Kellogg ( K) and Sara Lee ( SLE) have all said their financial results were impacted by higher commodity costs on everything from wheat and sugar to coffee beans and fuel, and implemented price increases to help offset those costs.

-- Written by Miriam Marcus Reimer in New York.

>To contact the writer of this article, click here: Miriam Reimer.

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