Krispy Kreme scores TD with Panthers promotion

by Eric Schroeder
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Krispy Kreme dozen glazed donuts
Krispy Kreme celebrates a Carolina Panthers win by offering guests a dozen original glazed donuts for $3.99 one day the week following the win.

WINSTON-SALEM, N.C. — The success of the National Football League’s Carolina Panthers has scored big for Krispy Kreme Doughnuts, Inc.

As part of its “special occasion days,” Krispy Kreme celebrates a Carolina Panthers win by offering guests a dozen original glazed donuts for $3.99 one day the week following the win. With 12 wins and no losses so far this season, the Panthers’ success has “turned into a real marketing success for us,” said Tony Thompson, president and chief executive officer of Krispy Kreme, during a Dec. 8 conference call with analysts to discuss third-quarter results.

In addition to its Panthers’ marketing event, Mr. Thompson said Krispy Kreme participated in Talk Like a Pirate Day in September. As part of the event, Krispy Kreme offered a free dozen original glazed donuts to guests who dressed like a pirate, or a free donut if guests talked like a pirate. Later in September the company celebrated National Coffee Day with a free cup of Krispy Kreme coffee and a free original glazed donut.

Tony Thompson, Krispy Kreme
Tony Thompson, president and c.e.o. of Krispy Kreme

“Special event days like these are designed to build greater brand awareness,” Mr. Thompson said.

The special event days helped Krispy Kreme turn in third-quarter results in line with expectations. Net income in the quarter ended Nov. 1 was $7,568,000, equal to 12c per share on the common stock, down 7% from $8,106,000, or 12c per share, in the same period a year ago. Revenues increased nearly 5% to $128,544,000 from $122,871,000.

“Domestic comp sales were positive 3.4%, consisting of a 2.8% gain at company shops and a 3.8% gain at franchise shops, while both included positive traffic,” Mr. Thompson said. “Internationally, we continued to experience significant expansion. Company stores segment contribution margin improved during the third quarter, as commodity costs remained lower year-over-year. We remain focused on the appropriate balance between promotional incentives to drive traffic and increase profitability.”

From a unit development standpoint, Krispy Kreme added 39 net shops worldwide during the third quarter, including 2 additional company shops. The company remains on pace to open more than 130 net new shops worldwide during fiscal 2016.

“Domestically, we’ve refined our site selection process and continue evolving and improving the economics on our small retail shop model, with a focus on revenues, margin and lower investment costs,” Mr. Thompson said. “Internationally, we continued expanding in existing markets, while also opening a number of new countries. In late November, we opened our first shop in South Africa, which also marked our 800th Krispy Kreme shop to open outside of the U.S. We have signed development agreements this year for shop openings in seven new countries, and have more in the pipeline.”

For the nine months ended Nov. 1, net income was $24,152,000, or 37c per share, up from $23,514,000, or 35c per share, in the same period a year ago. Revenues totaled $388,354,000, up 6% from $364,967,000.
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