Krispy Kreme Reports Financial Results For The Second Quarter Of Fiscal 2014

WINSTON-SALEM, N.C. - Aug. 29, 2013 // PRNewswire // - Krispy Kreme Doughnuts, Inc. (NYSE: KKD) (the "Company") today reported financial results for the second quarter of fiscal 2014, ended August 4, 2013. The Company also reaffirmed its adjusted earnings per share guidance in the range of $0.59 to $0.63 per share for the full year.

Second Quarter Fiscal 2014 Highlights Compared to the Year-Ago Period:

  • Revenues increased 10.4% to $112.7 million from $102.1 million
  • Company same store sales rose 10.0%, the nineteenth consecutive quarterly increase
  • Operating income rose 14.8% to $10.6 million from $9.2 million
  • Adjusted net income rose 17.2% to $9.6 million ($0.14 per share) from $8.2 million ($0.12 per share); adjusted net income and adjusted EPS reflect income tax expense only to the extent currently payable in cash and, in the second quarter of fiscal 2014, exclude a charge of $1.0 million for the refinancing of the Company's credit facilities and the retirement of the remaining balance of the Company's term loan; adjusted net income and adjusted EPS are non-GAAP measures (see the reconciliation of GAAP to adjusted earnings in the table accompanying this release)
  • The GAAP income tax provision for the quarter includes a non-cash charge of approximately $685,000 ($0.01 per share) to reduce the carrying value of deferred income tax assets as a result of the enactment in the second quarter of lower corporate income tax rates in North Carolina
  • Net income was $4.7 million ($0.07 per share) compared to $4.9 million ($0.07 per share) in the second quarter last year
  • Cash provided by operating activities was $13.1 million compared to $12.6 million in the second quarter last year

Chairman, President and Chief Executive Officer James H. Morgan commented: "This was an outstanding quarter for us, and results exceeded our expectations, despite unusual items that in the aggregate negatively affected our earnings by about $0.01 per adjusted share. Those items, combined with a $0.02 adverse swing in gains and losses on derivative positions, penalized the year-over-year comparison by $0.03 per adjusted share.

"Our dramatic same store sales gain was driven primarily through higher traffic counts as customers found more reasons to treat themselves to our unique products, while improvements in our Company Stores and Supply Chain segments drove an increase in consolidated operating margin. Fiscal 2014 is proving to be an exciting year for our business, and we continue to forecast year-over-year growth in adjusted earnings per share approaching or exceeding 30%. Attaining the high end of our forecasted earnings guidance appears increasingly achievable.

"Of particular significance, we are very pleased with the initial sales and operating results from the five new small factories we have opened since January. While we are looking forward to gaining additional experience with these shops and the four to five small factories we plan to open in the remainder of fiscal 2014, we are now sufficiently confident about the model to encourage our franchisees, new and old, to incorporate this format into their expansion plans. We expect the success of this new smaller and more efficient model will greatly enhance our long-term global expansion potential.

"In July, we were delighted to sign a 15-store development agreement for the Dallas market with an experienced multi-concept operator, which included the sale of our three existing stores in the market. This agreement represents a key step in our previously announced plan to significantly increase the pace of our U.S. store expansion.

"During the second quarter, we took advantage of a robust credit market and our steadily improving results to refinance our credit facilities and retire our $22 million term loan balance. We ended the quarter with over $60 million in cash and basically no debt, and reduced our interest expense going forward. We also announced a $50 million common stock buyback authorization. We are very gratified to have the resources to implement and expand the scope of our growth plans, further strengthen our balance sheet, and potentially complement this cash deployment with other ways to enhance shareholder returns.

Morgan concluded: "We accomplished much this past quarter. While continuing to execute on our strategic vision, we made investments in our long-term future and, at the same time, delivered strong operating and financial results for our shareholders."

Second Quarter Fiscal 2014 Results

Consolidated Results

For the second quarter ended August 4, 2013, revenues increased 10.4% to $112.7 million from $102.1 million.

Direct operating expenses increased to $93.8 million from $85.7 million, but as a percentage of total revenues fell to 83.2% from 83.9%. General and administrative expenses rose to $5.7 million from $4.8 million in the year-ago period and, as a percentage of total revenues, increased to 5.0% from 4.7%.

Operating income increased to $10.6 million from $9.2 million. Operating income in the second quarter last year included gains related to agricultural derivatives of approximately $1.1 million compared to losses in the current year of $410,000.

Adjusted net income was $9.6 million ($0.14 per share) compared to $8.2 million ($0.12 per share) in the second quarter last year.

As previously announced, on July 12, 2013, the Company refinanced its secured credit facilities. In connection with the refinancing, the Company retired in full the $22 million remaining balance of its term loan and increased the size of its revolving credit commitments from $25 million to $40 million. The refinancing and the retirement of the term loan are expected to result in a decrease in interest expense of approximately $1.0 million in the first twelve months following the transaction. The Company recorded a non-cash charge for the transaction of $1.0 million in the second quarter, consisting principally of the write-off of the deferred financing costs related to the retired term loan and the termination of a related interest rate hedge.

The GAAP effective tax rate for the second quarter was 49%. Included in GAAP income tax expense for the quarter is a charge of approximately $685,000 to revalue the Company's North Carolina deferred income tax assets to reflect a reduction in the corporate income tax rate enacted by the state legislature during the quarter.

Net income was $4.7 million ($0.07 per share) compared to $4.9 million ($0.07 per share), in the second quarter last year.

Segment Results

Company Stores revenues increased 9.2% to $75.7 million from $69.3 million. Same store sales at Company stores rose 10.0%, the nineteenth consecutive quarterly increase, driven principally by higher traffic. The Company Stores segment posted operating income of $1.8 million compared to $338,000 in the second quarter last year.

As previously announced, during the second quarter the Company completed the refranchising of the Dallas market. The refranchising included the sale to the new franchisee of three Company shops and the execution of a development agreement pursuant to which the new franchisee has agreed to develop an additional 15 Krispy Kreme shops in the market over the next five years. The Company realized a gain of approximately $880,000 on the refranchising transaction, which is included in the Company Stores segment's results for the second quarter. For the 52 weeks ended January 27, 2013, the three refranchised stores had sales of approximately $6.9 million, and for fiscal 2014 prior to the refranchising the stores had sales of approximately $3.4 million. Approximately 45% of those amounts represented wholesale sales. The franchise agreements entered into with the new Dallas franchisee do not include wholesale distribution rights.

Domestic Franchise revenues rose 15.2% to $2.8 million from $2.4 million, reflecting higher royalties. Total sales by domestic franchisees rose 13.1%; approximately 2.7 percentage points of the increase reflects the refranchising in fiscal 2014 of a total of six stores in Kansas, Missouri and Texas. Same store sales at Domestic Franchise shops increased 11.5%. Domestic Franchise segment operating income improved to $1.5 million from $1.3 million in the second quarter last year.

International Franchise revenues increased 4.8% to $6.1 million from $5.8 million, driven by higher royalties. Sales by international franchise stores rose 0.5%. Changes in the rates of exchange between the U.S. dollar and the foreign currencies in which the Company's international franchisees do business decreased sales by international franchisees measured in U.S. dollars by approximately $4.8 million in the second quarter of fiscal 2014 compared to last year, which adversely affected international royalty revenues by approximately $290,000. Excluding the effects of exchange rate changes, sales by international franchisees rose 5.2%. International Franchise segment revenue for the quarter included approximately $320,000 of royalties collected in the quarter related to franchisee sales in prior periods which had not previously been recorded due to uncertainty surrounding their collection. Adjusted to eliminate the effects of changes in foreign exchange rates, same store sales at international franchise stores fell 8.6%, reflecting, among other things, honeymoon effects from the substantial number of international store openings in recent years, as well as cannibalization as markets develop. The slight degradation in currency adjusted comps compared to the first quarter appears to have been influenced by a change in the timing of observance of a major holiday in many of our markets relative to last year, as well as by unseasonably warm weather in the United Kingdom in July. The International Franchise segment generated operating income of $4.2 million, unchanged from the second quarter last year, reflecting the deployment of increased resources to support current and anticipated future international growth.

KK Supply Chain revenues (including sales to Company stores) rose 11.1% to $57.2 million from $51.5 million in the same period last year, driven principally by higher doughnut mix volume and higher mix selling prices compared to last year. External KK Supply Chain revenues rose 14.7% to $28.2 million from $24.6 million in the year-ago period. KK Supply Chain generated operating income of $9.0 million in the second quarter of fiscal 2014, up from $8.4 million in the second quarter last year. KK Supply Chain's results of operations for the second quarter last year included gains on agricultural derivatives of approximately $1.1 million compared to losses in the current year of $410,000.

Outlook

Based on year-to-date results and other current information, management is reaffirming its forecast of adjusted net income for fiscal 2014 of between $42 million and $45 million, or between $0.59 and $0.63 per share. Achievement of this forecast would represent a year-over-year increase in adjusted earnings per share of between 26% to 34% from the $0.47 per share reported on a 52-week basis for fiscal 2013.

Conference Call

The Company will host a conference call to review financial results for the second quarter of fiscal 2014 as well as its outlook this afternoon at 4:30 p.m. (ET).

A live webcast of the conference call will be available at www.krispykreme.com. The conference call also can be accessed over the phone by dialing (877) 280-4954 or, for international callers, by dialing (857) 244-7311. An archived replay of the call will be available shortly after its conclusion by dialing (888) 286-8010, or (617) 801-6888 for international callers; the passcode is 39406842. The audio replay will be available through September 5, 2013. A transcript of the conference call also will be available on the Company website.

About Krispy Kreme

Krispy Kreme is a leading branded specialty retailer and wholesaler of premium quality sweet treats and complementary products, including its signature Original Glazed® doughnut. Headquartered in Winston-Salem, NC, the Company has offered the highest quality doughnuts and great tasting coffee since it was founded in 1937. Today, Krispy Kreme shops can be found in over 790 locations in 22 countries around the world. Connect with Krispy Kreme at www.krispykreme.com and on Facebook, Foursquare, Twitter and YouTube.

Information contained in this press release, other than historical information, should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management's beliefs, assumptions and expectations of our future economic performance, considering the information currently available to management. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition we express or imply in any forward-looking statements. The words "believe," "may," "forecast," "could," "will," "should," "would," "anticipate," "estimate," "expect," "intend," "objective," "seek," "strive" or similar words, or the negative of these words, identify forward-looking statements. Factors that could contribute to these differences include, but are not limited to: the quality of Company and franchise store operations; our ability, and our dependence on the ability of our franchisees, to execute on our and their business plans; our relationships with our franchisees; our ability to implement our international growth strategy; our ability to implement our domestic small shop operating model; political, economic, currency and other risks associated with our international operations; the price and availability of raw materials needed to produce doughnut mixes and other ingredients, and the price of motor fuel; our relationships with wholesale customers; our ability to protect our trademarks and trade secrets; changes in customer preferences and perceptions; risks associated with competition; risks related to the food service industry, including food safety and protection of personal information; compliance with government regulations relating to food products and franchising; increased costs or other effects of new government regulations relating to healthcare benefits; and risks associated with implementation of new technology platforms. These and other risks and uncertainties, which are described in more detail in the Company's most recent Annual Report on Form 10-K and other reports and statements filed with the United States Securities and Exchange Commission, are difficult to predict, involve uncertainties that may materially affect actual results and may be beyond the Company's control, and could cause actual results, performance or achievements to be materially different from those expressed or implied by any of these forward-looking statements. New factors emerge from time to time, and it is not possible for management to predict all such factors or to assess the impact of each such factor on the Company. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.

KRISPY KREME DOUGHNUTS, INC.

                           

CONSOLIDATED STATEMENT OF INCOME

 
                           
     

Three Months Ended

 

Six Months Ended

     

August 4,

 

July 29,

 

August 4,

 

July 29,

     

2013

 

2012

 

2013

 

2012

     

(In thousands, except per share amounts)

                                    

Revenues

$

112,729

 

$

102,115

 

$

233,354

 

$

210,611

Operating expenses:

                     
 

Direct operating expenses (exclusive of depreciation and

                     
   

amortization expense shown below)

 

93,806

   

85,657

   

190,364

   

174,348

 

General and administrative expenses 

 

5,655

   

4,770

   

11,710

   

11,228

 

Depreciation and amortization expense 

 

2,664

   

2,399

   

5,484

   

4,881

 

Impairment charges and lease termination costs 

 

4

   

55

   

12

   

86

Operating income 

 

10,600

   

9,234

   

25,784

   

20,068

Interest income 

 

70

   

61

   

131

   

88

Interest expense 

 

(354)

   

(420)

   

(791)

   

(818)

Loss on refinancing of debt

 

(967)

   

-

   

(967)

   

-

Equity in losses of equity method franchisees 

 

(60)

   

(53)

   

(113)

   

(103)

Other non-operating income and (expense), net 

 

(1)

   

79

   

(6)

   

157

Income before income taxes 

 

9,288

   

8,901

   

24,038

   

19,392

Provision for income taxes 

 

4,571

   

3,972

   

11,322

   

8,437

Net income

$

4,717

 

 $

4,929

 

$

12,716

 

 $

10,955

                           

Earnings per common share:

                     
 

Basic 

$

0.07

 

$

0.07

 

$

0.19

 

$

0.16

 

Diluted  

$

0.07

 

$

0.07

 

$

0.18

 

$

0.16

                           

Weighted average shares outstanding:

                     
 

Basic 

 

67,267

   

67,461

   

67,139

   

68,511

 

Diluted  

 

71,089

   

69,432

   

70,833

   

70,660

  

KRISPY KREME DOUGHNUTS, INC.

               

CONSOLIDATED BALANCE SHEET

 
               
     

August 4,

 

February 3,

   

2013

 

2013

     

(In thousands)

ASSETS

            

CURRENT ASSETS:

         

Cash and cash equivalents 

$

60,319

 

$

66,332

Receivables 

 

26,002

   

25,627

Receivables from equity method franchisees 

 

752

   

705

Inventories 

 

15,086

   

12,358

Deferred income taxes

 

23,152

   

23,323

Other current assets 

 

7,490

   

6,439

 

Total current assets 

 

132,801

   

134,784

Property and equipment 

 

84,940

   

78,024

Investments in equity method franchisees 

 

-

   

-

Goodwill and other intangible assets 

 

24,126

   

24,195

Deferred income taxes

 

83,210

   

93,088

Other assets 

 

9,896

   

11,847

 

Total assets 

$

334,973

 

 $

341,938

   

LIABILITIES AND SHAREHOLDERS' EQUITY

         

CURRENT LIABILITIES:

         

Current maturities of long-term debt 

$

213

 

$

2,148

Accounts payable 

 

14,197

   

12,198

Accrued liabilities 

 

29,927

   

32,330

 

Total current liabilities 

 

44,337

   

46,676

Long-term debt, less current maturities 

 

1,113

   

23,595

Other long-term obligations and deferred credits

 

26,484

   

25,235

               

Commitments and contingencies

         
               

SHAREHOLDERS' EQUITY:

         

Preferred stock, no par value 

 

-

   

-

Common stock, no par value 

 

357,621

   

354,068

Accumulated other comprehensive loss 

 

-

   

(338)

Accumulated deficit 

 

(94,582)

   

(107,298)

 

Total shareholders' equity 

 

263,039

   

246,432

   

Total liabilities and shareholders' equity                        

$

334,973

 

 $

341,938

               
 

  

KRISPY KREME DOUGHNUTS, INC.

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 
 
 

Six Months Ended

 

August 4,

 

July 29,

 

2013

 

2012

   

(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

            

Net income

$

12,716

 

$

10,955

Adjustments to reconcile net income to net cash provided by operating activities:

         
 

Depreciation and amortization expense

 

5,484

   

4,881

 

Deferred income taxes

 

10,050

   

7,524

 

Accrued rent expense

 

411

   

257

 

Loss on refinancing of debt

 

967

   

-

 

(Gain) loss on disposal of property and equipment

 

(62)

   

389

 

Gain on refranchising

 

(876)

   

-

 

Share-based compensation

 

1,867

   

2,148

 

Provision for doubtful accounts

 

(63)

   

(73)

 

Amortization of deferred financing costs

 

231

   

202

 

Equity in losses of equity method franchisees

 

113

   

103

 

Other

 

202

   

(1,258)

Change in assets and liabilities:

         
 

Receivables

 

(464)

   

(134)

 

Inventories

 

(2,889)

   

234

 

Other current and non-current assets

 

918

   

(1,968)

 

Accounts payable and accrued liabilities

 

(2,378)

   

(1,859)

 

Other long-term obligations and deferred credits

 

1,241

   

1,592

   

Net cash provided by operating activities 

 

27,468

   

22,993

CASH FLOWS FROM INVESTING ACTIVITIES:

         

Purchase of property and equipment

 

(12,362)

   

(5,233)

Proceeds from disposals of property and equipment

 

623

   

49

Proceeds from refranchising

 

681

   

-

Other investing activities

 

433

   

(24)

   

Net cash used for investing activities

 

(10,625)

   

(5,208)

CASH FLOWS FROM FINANCING ACTIVITIES:

         

Repayment of long-term debt

 

(24,455)

   

(1,100)

Deferred financing costs

 

(87)

   

(11)

Proceeds from exercise of stock options

 

1,686

   

-

Proceeds from exercise of warrants

 

-

   

9

Repurchase of common shares

 

-

   

(20,000)

   

Net cash used for financing activities

 

(22,856)

   

(21,102)

Net decrease in cash and cash equivalents

 

(6,013)

   

(3,317)

Cash and cash equivalents at beginning of period

 

66,332

   

44,319

Cash and cash equivalents at end of period

$

60,319

 

 $

41,002

KRISPY KREME DOUGHNUTS, INC.

NON-GAAP FINANCIAL INFORMATION

As of February 3, 2013, the Company had net deferred income tax assets of approximately $116 million, of which approximately $76 million related to federal and state net operating loss carryovers.  The Company's federal net operating loss carryovers totaled approximately $206 million.

The Company has reported cumulative pretax income of approximately $100 million since the beginning of fiscal 2010, and the Company also has generated significant taxable income during this period.  However, because of the Company's utilization of its federal and state net operating loss carryovers and other deferred tax assets, the Company's cash payments for income taxes have been relatively insignificant during this period.  As a result, the Company's provisions for income tax expense have substantially exceeded its cash payments for income taxes.  Until such time as the Company's net operating loss carryovers are exhausted or expire, GAAP income tax expense is expected to continue to substantially exceed the amount of cash income taxes payable by the Company.

The Company's fiscal year ends on the Sunday closest to January 31, which periodically results in a 53-week year.  Fiscal 2013 contained 53 weeks, while fiscal 2014 will contain 52 weeks.

In the second quarter of fiscal 2014, the Company recorded a charge of $1.0 million related to the refinancing of its secured credit facilities, consisting principally of the writeoff of deferred financing costs related to the Company's term loan, which was retired in full, and the termination of an interest rate hedge related to the term loan.  Charges of this nature are not expected to recur on a regular basis.

The following non-GAAP financial information and related reconciliation to GAAP measures are provided to assist the reader in understanding the effects of the above facts and transactions on the Company's results of operations.  In addition, the non-GAAP financial information is intended to illustrate the material difference between the Company's income tax expense and income taxes currently payable.  These non-GAAP performance measures are consistent with other measurements made by management in the operation of the business which do not consider income taxes except to the extent to which those taxes currently are payable, for example, capital allocation decisions and incentive compensation measurements that are made on a pretax basis.

                           
     

Historical Periods

     

Three Months Ended

 

Six Months Ended

     

August 4,

 

July 29,

 

August 4,

 

July 29,

     

2013

 

2012

 

2013

 

2012

     

(In thousands, except per share amounts)

                                    

Net income, as reported

$

4,717

 

 

$

4,929

 

$

12,716

 

$

10,955

Loss on refinancing of debt

 

967

   

-

   

967

   

-

Provision for deferred income taxes

 

3,945

   

3,290

   

10,050

   

7,524

Adjusted net income

$

9,629

 

$

8,219

 

$

23,733

 

$

18,479

                           

Adjusted earnings per common share:

                     

      Basic

$

0.14

 

$

0.12

 

$

0.35

 

$

0.27

      Diluted

$

0.14

 

$

0.12

 

$

0.34

 

$

0.26

                           

Weighted average shares outstanding:

                     

      Basic

 

67,267

   

67,461

   

67,139

   

68,511

      Diluted

 

71,089

   

69,432

   

70,833

   

70,660

  

   

Management's Earnings Guidance

 

Historical  Period

   

Year Ending February 2, 2014

 

Year Ended

   

From

 

To

 

February 3, 2013

   

(In thousands, except per share amounts)

                         

Net income, as reported

$

24,500

 

 

$

26,500

 

$

20,779

Loss on refinancing of debt

 

1,000

   

1,000

   

-

Provision for deferred income taxes

 

16,500

   

17,500

   

13,413

Adjusted net income

 

42,000

   

45,000

   

34,192

Earnings for the 53rd week

 

-

   

-

   

(1,273)

Adjusted net income - 52 week basis

$

42,000

 

$

45,000

 

$

32,919

                   

Adjusted earnings per common share:

               

      Basic

$

0.62

 

$

0.66

 

$

0.51

      Diluted

$

0.59

 

$

0.63

 

$

0.49

                   

Adjusted earnings per common share - 52 week basis:

               

      Basic

$

0.62

 

$

0.66

 

$

0.49

      Diluted

$

0.59

 

$

0.63

 

$

0.47

                   

Weighted average shares outstanding:

               

      Basic

 

68,000

   

68,000

   

67,624

      Diluted

 

71,000

   

71,000

   

69,896

 

KRISPY KREME DOUGHNUTS, INC.

                                   

SEGMENT INFORMATION

                 
             

Three Months Ended

 

Six Months Ended

             

August 4,

 

July 29,

 

August 4,

 

July 29,

             

2013

 

2012

 

2013

 

2012

             

(In thousands)

Revenues:

                              
 

Company Stores: 

                     
   

On-premises sales:

                     
     

Retail sales

$

33,581

 

$

29,062

 

$

69,598

 

$

59,658

     

Fundraising sales

 

2,559

   

2,651

   

7,336

   

7,531

       

Total on-premises sales

 

36,140

   

31,713

   

76,934

   

67,189

   

Wholesale sales

 

39,549

   

37,625

   

80,676

   

75,490

         

 Company Stores revenues 

 

75,689

   

69,338

   

157,610

   

142,679

 

Domestic Franchise 

 

2,799

   

2,430

   

5,670

   

5,063

 

International Franchise 

 

6,057

   

5,781

   

12,502

   

11,808

 

KK Supply Chain:

                     
       

Total revenues 

 

57,201

   

51,465

   

117,012

   

105,250

       

Less – intersegment sales elimination 

 

(29,017)

   

(26,899)

   

(59,440)

   

(54,189)

         

 External KK Supply Chain revenues 

 

28,184

   

24,566

   

57,572

   

51,061

           

Total revenues 

$

112,729

 

 $

102,115

 

 $

233,354

 

 $

210,611

                                   

Operating income:

                     
 

Company Stores 

$

1,790

 

$

338

 

$

7,104

 

$

3,286

 

Domestic Franchise 

 

1,526

   

1,329

   

2,965

   

2,898

 

International Franchise 

 

4,239

   

4,162

   

8,770

   

8,656

 

KK Supply Chain 

 

8,999

   

8,392

   

19,238

   

16,869

       

Total segment operating income 

 

16,554

   

14,221

   

38,077

   

31,709

 

Unallocated general and administrative expenses 

 

(5,655)

   

(4,770)

   

(11,710)

   

(11,228)

 

Corporate administration depreciation and amortization

                     
   

 expense

 

(295)

   

(162)

   

(571)

   

(327)

 

Impairment charges and lease termination costs 

 

(4)

   

(55)

   

(12)

   

(86)

       

Consolidated operating income 

$

10,600

 

 $

9,234

 

 $

25,784

 

 $

20,068

                                   

Depreciation and amortization expense:

                     
 

Company Stores 

$

2,174

 

$

1,944

 

$

4,528

 

$

4,041

 

Domestic Franchise 

 

22

   

55

   

36

   

110

 

International Franchise 

 

1

   

3

   

4

   

6

 

KK Supply Chain 

 

172

   

235

   

345

   

397

 

Corporate administration 

 

295

   

162

   

571

   

327

       

Total depreciation and amortization expense 

$

2,664

 

 $

2,399

 

 $

5,484

 

 $

4,881

  

KRISPY KREME DOUGHNUTS, INC.

                                         

SELECTED OPERATING STATISTICS

                             
           

Three Months Ended

 

Six Months Ended

           

August 4,

 

July 29,

 

August 4,

 

July 29,

         

2013

2012

2013

2012

                               

Systemwide Sales (in thousands):(1)

                             
 

Company stores 

$

74,893

      

$

68,710

      

$

156,014

      

$

141,515

 
 

Domestic Franchise stores 

 

78,616

     

69,532

     

159,602

     

141,504

 
 

International Franchise stores 

 

102,971

     

102,437

     

213,226

     

207,357

 
 

International Franchise stores, in constant dollars(2)

 

102,971

     

97,914

     

213,226

     

199,447

 
                                         

Change in Same Store Sales (on-premises sales only):(3)

                             
 

Company stores

 

10.0

%

   

5.4

%

   

10.8

%

   

3.7

%

 

Domestic Franchise stores 

 

11.5

%

   

6.7

%

   

11.4

%

   

6.2

%

 

International Franchise stores 

 

(13.0)

%

   

(12.7)

%

   

(12.0)

%

   

(10.3)

%

 

International Franchise stores, in constant dollars(2)

 

(8.6)

%

   

(10.0)

%

   

(7.9)

%

   

(8.7)

%

                                         

Company Stores - Change in Same Store Sales:

                             
 

Retail pricing

 

3.8

%

   

0.0

%

   

3.3

%

   

1.4

%

 

Guest check average (exclusive of pricing)

 

(0.5)

     

(0.7)

     

(0.4)

     

(1.2)

 
 

Customer count

 

6.8

     

5.9

     

7.8

     

3.3

 
 

Other

 

(0.1)

     

0.2

     

0.1

     

0.2

 
   

Total

 

10.0

%

   

5.4

%

   

10.8

%

   

3.7

%

                                         

Change in Same Store Customer Count - Company stores

                             
 

(retail sales only)

 

7.5

%

   

6.6

%

   

9.0

%

   

3.8

%

                                         

Average guest check - Company stores (retail sales only)

$

7.68

   

$

7.43

   

$

7.49

   

$

7.27

 
                                         

Company stores - store operating weeks

 

1,221

     

1,203

     

2,439

     

2,399

 
                                         

Wholesale Metrics - Company stores:(4)

                             
 

Grocers/mass merchants: 

                             
   

Change in average weekly number of doors

 

(5.4)

%

   

(4.9)

%

   

(4.8)

%

   

(4.7)

%

   

Change in average weekly sales per door

 

9.6

%

   

8.4

%

   

12.5

%

   

8.5

%

 

Convenience stores: 

                             
   

Change in average weekly number of doors

 

0.7

%

   

(7.8)

%

   

(0.9)

%

   

(9.2)

%

   

Change in average weekly sales per door

 

6.5

%

   

8.4

%

   

6.9

%

   

11.8

%

1)

Systemwide sales, a non-GAAP financial measure, include the sales by both Company and franchise stores but excludes sales among Company and franchise stores.  The Company believes systemwide sales data are useful in assessing the overall performance of the Krispy Kreme brand and, ultimately, the performance of the Company.  The Company's consolidated financial statements appearing elsewhere herein include sales by Company stores, sales to franchisees by the KK Supply Chain business segment, and royalties and fees received from franchise stores based on their sales, but exclude sales by franchise stores to their customers.

2)

Computed on a pro forma basis assuming the average rate of exchange between the U.S. dollar and each of the foreign currencies in which the Company's international franchisees conduct business had been the same in the comparable prior year period. 

3)

The change in "same store sales" represents the aggregate on-premises sales (including fundraising sales) during the current year period for all stores which had been open for more than 56 consecutive weeks during the current year period (but only to the extent such sales occurred in the 57th or later week of each store's operation) divided by the aggregate on-premises sales of such stores for the comparable weeks in the preceding year period.  Once a store has been open for at least 57 consecutive weeks, its sales are included in the computation of same stores sales for all subsequent periods.  In the event a store is closed temporarily (for example, for remodeling) and has no sales during one or more weeks, such store's sales for the comparable weeks during the earlier or subsequent period are excluded from the same store sales computation.  The change in "same store customer count" is similarly computed, but is based upon the number of retail transactions reported in the Company's point-of-sale system.

4)

For Company wholesale sales, "average weekly number of doors" represents the average number of customer locations to which product deliveries are made during a week by Company Stores, and "average weekly sales per door" represents the average weekly sales to each such location by Company Stores.

 

KRISPY KREME DOUGHNUTS, INC.

                 

STORE COUNT

                 
   

Number of Company Stores

   

Factory

                    
   

Stores

Hot Shops

Fresh Shops

Total

                 

Three months ended August 4, 2013

               

May 5, 2013

 

74

 

20

 

1

 

95

Opened 

 

2

 

-

 

-

 

2

Closed 

 

(1)

 

-

 

-

 

(1)

Transferred to Domestic Franchise

 

(3)

 

-

 

-

 

(3)

August 4, 2013

 

72

 

20

 

1

 

93

                 

Six months ended August 4, 2013

               

February 3, 2013

 

76

 

20

 

1

 

97

Opened 

 

3

 

-

 

-

 

3

Closed 

 

(1)

 

-

 

-

 

(1)

Transferred to Domestic Franchise

 

(6)

 

-

 

-

 

(6)

August 4, 2013

 

72

 

20

 

1

 

93

                 

Three months ended July 29, 2012

               

April 29, 2012

 

72

 

19

 

1

 

92

Opened 

 

1

 

-

 

-

 

1

Closed 

 

-

 

-

 

-

 

-

July 29, 2012

 

73

 

19

 

1

 

93

                 

Six months ended July 29, 2012

               

January 29, 2012

 

72

 

19

 

1

 

92

Opened 

 

1

 

-

 

-

 

1

Closed 

 

-

 

-

 

-

 

-

July 29, 2012

 

73

 

19

 

1

 

93

                 

 

KRISPY KREME DOUGHNUTS, INC.

                 

STORE COUNT

                 
   

Number of Domestic Franchise Stores

   

Factory

                    
   

Stores

Hot Shops

Fresh Shops

Total

                 

Three months ended August 4, 2013

               

May 5, 2013

 

102

 

30

 

14

 

146

Opened 

 

-

 

1

 

-

 

1

Closed 

 

-

 

-

 

-

 

-

Transferred from Company Stores

 

3

 

-

 

-

 

3

August 4, 2013

 

105

 

31

 

14

 

150

                 

Six months ended August 4, 2013

               

February 3, 2013

 

99

 

29

 

14

 

142

Opened 

 

-

 

2

 

-

 

2

Closed 

 

-

 

-

 

-

 

-

Transferred from Company Stores

 

6

 

-

 

-

 

6

August 4, 2013

 

105

 

31

 

14

 

150

                 

Three months ended July 29, 2012

               

April 29, 2012

 

102

 

26

 

14

 

142

Opened 

 

-

 

-

 

-

 

-

Closed 

 

(1)

 

-

 

-

 

(1)

July 29, 2012

 

101

 

26

 

14

 

141

                 

Six months ended July 29, 2012

               

January 29, 2012

 

102

 

25

 

15

 

142

Opened 

 

1

 

2

 

-

 

3

Closed 

 

(2)

 

(1)

 

(1)

 

(4)

July 29, 2012

 

101

 

26

 

14

 

141

                 

 

KRISPY KREME DOUGHNUTS, INC.

                     

STORE COUNT

                     
   

Number of International Franchise Stores

   

Factory

               
 

Stores

    

Hot Shops

    

Fresh Shops

    

Kiosks

    

Total

                     

Three months ended August 4, 2013

                   

May 5, 2013

 

121

 

9

 

271

 

131

 

532

Opened 

 

1

 

-

 

11

 

7

 

19

Closed 

 

(2)

 

-

 

(3)

 

-

 

(5)

Change in store type

 

(1)

 

-

 

1

 

-

 

-

August 4, 2013

 

119

 

9

 

280

 

138

 

546

                     

Six months ended August 4, 2013

                   

February 3, 2013

 

120

 

9

 

257

 

123

 

509

Opened 

 

4

 

-

 

27

 

15

 

46

Closed 

 

(4)

 

-

 

(5)

 

-

 

(9)

Change in store type

 

(1)

 

-

 

1

 

-

 

-

August 4, 2013

 

119

 

9

 

280

 

138

 

546

                     

Three months ended July 29, 2012

                   

April 29, 2012

 

115

 

11

 

223

 

109

 

458

Opened 

 

4

 

-

 

14

 

6

 

24

Closed 

 

-

 

-

 

(4)

 

(1)

 

(5)

Change in store type

 

(1)

 

-

 

1

 

-

 

-

July 29, 2012

 

118

 

11

 

234

 

114

 

477

                     

Six months ended July 29, 2012

                   

January 29, 2012

 

118

 

11

 

226

 

105

 

460

Opened 

 

4

 

-

 

28

 

12

 

44

Closed 

 

(3)

 

-

 

(14)

 

(10)

 

(27)

Change in store type

 

(1)

 

-

 

(6)

 

7

 

-

July 29, 2012

 

118

 

11

 

234

 

114

 

477

                     
                     

SOURCE Krispy Kreme Doughnut Corporation

Contacts:

Media
Lafeea Watson
(336) 726-8878
lwatson@krispykreme.com

Investor Relations
Anita K. Booe
(336) 703-6902
abooe@krispykreme.com

###

Share this Story:

Comments:

comments powered by Disqus

Franchise News Room »


News By Industry »


Featured Opportunities

Sky Zone
Sky Zone created, built and franchises the first of its kind wall-to-wall trampoline playing courts with unlimited purposes and endless possibilities.
Jersey Mike's Subs
Jersey Mike's, a fast-casual sub sandwich franchise with more than 1,500 locations open and under development nationwide, believes that making a sub...
Which Wich® Superior Sandwiches
Which Wich is changing the franchising game with our fun, personalized, and incredibly attractive business approach.
Nestle Toll House Cafe by Chip
Nestlé Toll House Café by Chip is the only major, national dessert café that features top-quality branded cookies, baked goods, coffee, ice cream...
Marco's Pizza®
Marco's is one of the top take out and delivery pizza franchises. We're highly rated and rapidly growing and we are looking for passionate...

Subscribe to Franchising.com Express

A Franchise Update Media Production
Franchise Update Media | P.O. Box 20547 // San Jose, CA 95160 // PH. (408) 402-5681
Copyright © 2001 - 2017. All Rights Reserved.

In Loving Memory Of Timothy Gardner (1987-2014)