Krispy Kreme narrows loss in Q3
by Eric Schroeder
WINSTON-SALEM, N.C. — Progress achieved in implementing strategic initiatives helped Krispy Kreme Doughnuts, Inc. shrink its loss for the third quarter ended Nov. 1 to $2,388,000 from $5,885,000 in the same period a year earlier. The year-ago quarter included a non-operating charge of $900,000 related to a loan to a franchisee. Operating income for the most recent quarter, meanwhile, was $633,000, which compared with a loss of $1,312,000 in the third quarter of fiscal 2009.
Sales for the quarter were $83,600,000, down 11% from $94,338,000. Same-store sales at company-owned locations rose 5.1%.
"Our results continued to improve year over year in the third quarter," said Jim Morgan, chairman, president and chief executive officer. "Our improved results are evidence of progress in implementing our strategic initiatives, which have us on a path toward building a growing, profitable business that is sustainable for the long term."
Krispy Kreme completed a number of initiatives during the third quarter, including opening two new company small retail shops; signing letters of intent for five additional small retail concept shop leases in Virginia and Tennessee; and awarding franchise development rights for Thailand and the Dominican Republic.
In addition, the company used cash from operations to make a discretionary $5 million prepayment on its term loan, bringing total prepayments year-to-date to $25 million. With the prepayments, Krispy Kreme said its debt stands at $49 million, which compares with debt of $75 million a year ago.