WINSTON-SALEM N.C. Krispy Kreme Doughnuts Inc. reported a narrower loss for its fiscal 2009 second quarter, but the company said revenue dropped on slow sales and fewer units in operation.
For the quarter ended Aug. 3, the operator or franchisor of 494 doughnut shops recorded a net loss of $1.9 million, or 3 cents per share, versus a year-ago net loss of $27.0 million, or 42 cents a share. The year-ago quarter included impairment and lease termination charges of $22.1 million, or 35 a cents a share, the company said.
Latest-quarter revenue fell 9.5 percent, to $94.2 million, which Krispy Kreme said reflected decreases of 13.5 percent in sales at company-owned stores and 5.1 percent in supply-chain revenue. Franchisee revenue, however, was up 30 percent.
Systemwide same-store sales rose 3.9 percent for the quarter, which Krispy Kreme said was entirely due to international results. Almost all of Krispy Kreme’s 260 international stores are operated by franchisees.
During the quarter, Krispy Kreme franchisees opened 31 stores, mostly overseas. Three company and four franchised stores closed in the quarter.
Krispy Kreme said many of its domestic franchisees continue to struggle with rising commodity and energy costs. As a result, the company expects franchisees to open fewer stores in the future, and said a “significant” number of franchised stores could close.
Jim Morgan, Krispy Kreme’s chairman, chief executive and president, said difficult economic conditions would continue to challenge the company, but that “it’s our task to operate successfully no matter the headwinds.”
Krispy Kreme said it would look to build sales in part by developing “new small retail concept shops” in certain markets. The company also said it would focus on improving operations, introducing new menu items and building on international growth.