Krispy Kreme stumbles again
After reviving from its famous Wall Street flame-out, the doughnut company's second-quarter earnings leave investors cold.
The restaurant chain's profit fell to $4.7 million, or 7 cents a share, for the second quarter. That's down from $4.9 million in the same period a year earlier. And while adjusted per-share earnings rose 17% to 14 cents, that was two cents short of analysts' expectations.And in spite of news that second-quarter revenue and same-store sales (sales at locations open for at least a year) both rose 10%, Krispy Kreme share prices fell off the counter -- dropping over 12% after the report hit and closing 15% lower.
It was rough news for a company that had previously met or beaten Wall Street forecasts in six of the the last seven quarters. But then again, Krispy Kreme's story has been something of a saga since its IPO in 2000.
It was around that time that the company's light, fluffy doughnuts, long a staple in the Southeast U.S., became a national sensation. Krispy Kreme stock soared in its first two years, but that sugar high soon gave way to a bitter taste in investor's mouths.
Another trend, the low-carb diet, took its toll on doughnuts and other sweets. The company also came under fire for an accounting scandal and liquidity issues. Same-store sales dropped, as did overall revenue. Krispy Kreme went through four CEOs in less than three years, and by early 2005 its stock had fallen nearly 75% from record highs in 2003.
But there was a sugar coating to Krispy Kreme's fall. An aggressive restructuring program closed unprofitable stores and made existing ones smaller, which in turn boosted cash flow and helped cut debt.
By 2010, Krispy Kreme was in full turnaround mode, posting profits again, while expanding operations both at home and abroad.
So, despite a weaker than expected outlook for the rest of the year, company president and CEO James Morgan says the smaller and more efficient Krispy Kreme is confident in its future -- and even plans to open four to five small factories later this year.
That could be sweet news for investors who believe that the "hot now" sign might not only apply to its doughnuts but to its stock as well.
At my local Krispy Kreme, they stopped giving away the free HOT Doughnut when you are waiting in line, and the "HOT NOW" sign is never on any more.
I love Krispy Kreme, but a good indication of the downward spiral of any company is when they start getting stingy with their product.
Giving away free samples is no longer profitable.
The welfare public,
YES the ones that get FOOZE STAMPS are in line at Krispy Kreme and all other establishments giving out free samples, and they soon learn to demand a doughnut for all theys childrens and then ask where the bathroom is after purchasing a coffee to go.
I'm off donuts--haven't had one now going on seven years.
KKD's to me are only good when they are picked from the line.
I had the cold ones on the store shelves. Bakery ones are the
only good ones. Also not free anymore when the sign is on.
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
John Stumpf acknowledges that growth has been slow, but he says he's still optimistic.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.