By REUTERS

Published: August 26, 2004

Filed at 7:14 a.m. ET

NEW YORK (Reuters) - Krispy Kreme Doughnuts Inc. (KKD.N) on Thursday posted sharply lower quarterly earnings, signaled that the second half of the year would be weak and scaled back store openings as it tries to overhaul operations after being battered by popular low-carbohydrate diets.

The doughnut chain also said it was not providing earnings guidance for its current third quarter or fiscal 2005 as it hopes to focus on delivering improved long-term results. Krispy Kreme's shares fell 29 percent after it gave a profit warning back in May.

``Although we are disappointed with the second quarter financial results, we are optimistic about the long-term growth potential of the business,'' Chief Executive Scott Livengood said in a statement. ``I am confident in our ability to restore our business momentum.''

Livengood did not cite a specific reason for the second-quarter shortfall in the company's release, but in the past the company has pointed to the low-carb craze as a problem for its business.

Krispy Kreme, which in July said federal investigators were investigating its repurchase of franchises, said it earned $5.8 million, or 9 cents per share, on a reported basis in its second quarter, compared with $13 million, or 21 cents per share, a year earlier.

Six analysts on average had expected profit of 22 cents a share, with estimates ranging from 19 cents to 24 cents a share, according to Reuters Estimates.

http://www.nytimes.com/reuters/busi...reme-earns.html

funny how we keep hearing predictions that the "low-carb craze" is waning. looks like wishful thinking at this point...

Poor Krispy Kreme. They can't win in a low-carb, OR a low-fat world. Their entire business is built on that high-carb, high-fat combination.

-----------------------------------------------------------------------------

Business - Reuters


Krispy Kreme Profit Plunges, Stock Sinks

27 minutes ago Add Business - Reuters to My Yahoo!


By Ellis Mnyandu

NEW YORK (Reuters) - Krispy Kreme Doughnuts Inc.(NYSE:KKD - news) on Thursday reported a sharp drop in quarterly profit and signaled that business may not recover any time soon, sending its shares down more than 17 percent in pre-market trading.

Related Quotes
KKD
DJIA
NASDAQ
S&P 500
15.36
10163.01
1853.60
1102.68
0.00
-18.73
-7.12
-2.28



delayed 20 mins - disclaimer
Quote Data provided by Reuters






Junk Be Gone





The company, whose business is being assailed partly by the growing popularity of low-carbohydrate diets, said it has decided to cut new store openings for this year and would not offer any projections on third-quarter or fiscal 2005 results.


The latest profit shortfall, for which there was very little explanation in the company's earnings release, marks another sour episode in a string of negative developments that have recently cast a shadow on the Winston-Salem, North Carolina-based doughnut chain.


Krispy Kreme, which earlier this month saw its chief operating officer defect for another job elsewhere, said it now expects to open about 75 new stores, including about 60 factory and 15 satellite stores, systemwide in its current fiscal year.


Back in May, it had said it planned 100 new stores this year, about 17 percent fewer than planned initially.


Chief Executive Scott Livengood called the company's latest results "disappointing," but at the same time sought to reassure investors that Kripy Kreme was confident about its long-term prospects.


In the near-term, however, the company forecast sales growth to be slower than previously planned. It said systemwide sales would likely grow by about 15 percent during fiscal 2005 and about 10 percent in the second half of the year.


In May the company had forecast systemwide full-year sales growth between 20 percent and 25 percent. Systemwide sales for the first half of the year jumped 19.4 percent.


Skip Carpenter, an analyst at Thomas Weisel Partners, said it appeared that Kripy Kreme's business was "in turmoil."


"Obviously the second quarter is exceptionally disappointing and it looks like they continue to have difficulties in front of them, but I'd rather listen to what management has to say given the turmoil that the business is in before I have official comment," said Carpenter.


Livengood did not cite a specific reason for the second-quarter shortfall in the company's release, but in the past the company has blamed the low-carb craze as a problem for its business.


Krispy Kreme, which in July said federal investigators were investigating its repurchase of franchises, said it earned $5.8 million, or 9 cents per share, on a reported basis in its second quarter, compared with $13 million, or 21 cents per share, a year earlier.


Six analysts on average had expected profit of 22 cents a share, with estimates ranging from 19 cents to 24 cents a share, according to Reuters Estimates.


Total revenue, which includes sales from company stores, franchise operations and Krispy Kreme Manufacturing and Distribution, climbed 11.5 percent to $177.4 million in the quarter. On a comparable-store basis, systemwide sales were up 0.1 percent and company store sales rose 0.6 percent, Krispy Kreme said.


The company's stock sagged to $12.65 on INET electronic brokerage system, down from its close of $15.36 on the New York Stock Exchange (news - web sites) on Wednesday.

Sorry, I just noticed somebody beat me to the punch on this one.

This is a much better indication of the popularity of low carbing than looking at the sales of low carb products. We don't need the low carb products. But, you sure can't be eating Krispy Kremes if you are low carbing.

This is being discussed live over the wbal network radio. Click here to listen http://wbal.com/listen/player.asp

He is also talking about how sodas arnt bad and junk food in vending machines at our childrens schools arnt bad. Hes claiming that its the parents that are bad for not controling their children while they are at school.

I for one wouldn't mind sampling an occaisional low carb krispy kreme donut, if they ever come up with one... but only once in awhile...

Maybe junky food is dying the death it deserves. I have noticed that the only slot on the vending machine that typically runs out each week is the one with the nuts in it.

Straight from Krispy Kreme's website:

INGREDIENT INFORMATION
The only animal byproducts used in our doughnut are eggs (whites and yolks) and dairy products (including milk, butter, yogurt, whey, nonfat milk and nonfat whey). Our doughnuts are cooked in 100% vegetable oil shortening (partially hydrogenated soybean and/or cottonseed oil). All monoglycerides, diglycerides and enzymes are vegetable based. The lecithin we use is soy based. We also use wheat in our doughnuts, including bran, germ, gluten, starch and flour. Our products may contain allergens. To get further information about our products call us at 1800 4KRISPY.

They seem to be advertising the fact that they are still using trans-fats in their products as a good thing. They also use high fructose corn syrup in many of their donut varieties. I had a hard time reading most of the nutritional info because it was in pdf format and so small I could barely see it and I couldn't enlarge it. Anyway, I don't think it's just low-carb dieting that's to blame, I think it's the garbage they put in their product that factors in there as well. There are plenty of people out there not on low-carb diets that still care about what they put into their bodies. The masses are wisening up!