Krispy Kreme Reports Financial Results for the Second Quarter of Fiscal 2015

Reaffirms Full Year Adjusted EPS Guidance

WINSTON-SALEM, N.C. - (BUSINESS WIRE) - Sep. 9, 2014 - Krispy Kreme Doughnuts, Inc. (NYSE: KKD) (the "Company") today reported financial results for the second quarter of fiscal 2015, ended August 3, 2014. The Company also reaffirmed its adjusted earnings guidance for the full year.

Second Quarter Fiscal 2015 Highlights Compared to the Year-Ago Period:

  • Systemwide store count rose 3.4% in the quarter (6.8% year-to-date) to 884 Company and franchise shops worldwide
  • Systemwide domestic same store sales rose 2.8%, including a 1.1% gain at Company shops; constant currency international franchise same store sales declined 2.4%
  • Revenues increased 6.9% to $120.5 million from $112.7 million
  • Operating income was $9.6 million compared to $10.6 million; losses on agricultural derivatives reduced second quarter fiscal 2015 operating income by approximately $1.3 million ($0.02 per share adjusted)
  • Adjusted net income was $9.0 million ($0.13 per share) compared to $9.6 million ($0.14 per share); adjusted net income and adjusted EPS are non-GAAP measures (see the reconciliation of GAAP to adjusted earnings in the table accompanying this release)
  • Net income was $5.8 million ($0.08 per share) compared to $4.7 million ($0.07 per share) in the second quarter last year
  • Cash provided by operating activities was $14.0 million compared to $13.1 million in the second quarter last year

President and Chief Executive Officer Tony Thompson commented: "A key priority going into the quarter was to regain top line momentum in our Company shops. And we did, by very strategically using promotional incentives and other marketing tools to increase traffic count and top line growth.

"Our Company and domestic franchise shops posted same store sales gains of 1.1% and 3.8%, respectively, on top of double-digit growth in the second quarter last year. On a two-year stacked basis, same store sales rose 11.6% at Company stores and 15.8% at domestic franchise shops, enabling us to significantly outperform most, if not all, of our quick-service restaurant peers. Outside the U.S., our international franchisees continue to perform well, and we are excited about their success in their individual markets.

"With same store sales turning positive as we moved through the quarter and the momentum continuing into the current period, and with the acceleration of domestic unit growth and ongoing expansion in other countries, our 10%+ systemwide unit growth plan for fiscal 2015 is on track, and we are pleased to reaffirm our adjusted EPS guidance for the full year."

Thompson continued: "Our longer-term strategic focus remains on increasing doughnut sales and guest traffic by creating more "every day" doughnut use occasions for our products, while enhancing and expanding our beverage platform. The introduction of Krispy Kreme ready-to-drink coffee earlier this year and the August launch of Krispy Kreme K-Cup® packs demonstrate our recent progress in bringing Krispy Kreme-branded beverages to market. However, I firmly believe that we have only scratched the surface in capitalizing on our retail and licensing beverage opportunities. We will, therefore, be investing to strengthen our beverage capabilities with the intention of building consumer awareness and market share from current levels."

Thompson concluded: "Since joining Krispy Kreme in June, I have visited Company and franchise shops and commissaries across the country and met with team members, franchise partners, suppliers, guests and shareholders. Through these interactions, I have gained an even greater appreciation for Krispy Kreme’s inspiring culture, the talent of our team members and partners, and the widespread passion for our iconic brand from all our stakeholders. I am more excited than ever about our ability to grow our revenues, profitability and store count over the long-term."

Second Quarter Fiscal 2015 Results

Consolidated Results

Revenues increased 6.9% to $120.5 million from $112.7 million.

Direct operating expenses were $101.1 million, representing 83.9% of revenues compared to 83.2% of revenues last year.

General and administrative expenses were $6.7 million (5.6% of revenues) compared to $5.7 million (5.0% of revenues) in the year-ago period. The increase in general and administrative expenses in the second quarter of fiscal 2015 reflects, among other things, previously announced expenses related to the implementation of the new enterprise resource planning system totaling approximately $0.9 million; there were no comparable ERP costs in the second quarter last year.

Operating income was $9.6 million compared to $10.6 million last year.

Adjusted net income was $9.0 million ($0.13 per share) compared to $9.6 million ($0.14 per share) last year.

Segment Results

Company Stores’ revenues increased 3.8% to $78.5 million from $75.7 million. Same store sales at Company shops rose 1.1% against an extremely robust gain of 10.5% in the second quarter last year. The Company Stores segment posted operating income of $1.3 million compared to $1.8 million last year.

On June 17, 2014, the Company acquired the business and operating assets of its franchisee in Birmingham, Alabama, consisting of four Krispy Kreme shops that had fiscal 2014 sales of approximately $9 million. The acquired assets include the seller’s franchise rights for 13 counties in Alabama. The total transaction consideration was approximately $7.5 million cash.

The Company Stores segment recorded charges to earnings related to the acquisition of approximately $0.4 million in the second quarter. The charges reflect the settlement as part of the acquisition of the pre-existing franchise contract between the Company and the franchisee, as well as approximately $0.1 million of transaction costs.

Approximately $3.9 million of the purchase price was allocated to reacquired franchise rights, which is being amortized to earnings through 2020, which was the expiration date of the terminated franchise agreement. After accounting for such amortization, the Company does not expect that the acquisition will have a material accretive effect on the Company’s results of operations, at least in the short term.

Domestic Franchise revenues increased 17.8% to $3.3 million, reflecting higher royalties, initial franchise fees and ancillary revenues. Total sales by domestic franchisees rose 7.0%, while same store sales at Domestic Franchise shops increased 3.8%. Domestic Franchise segment operating income increased to $1.9 million from $1.5 million last year.

International Franchise revenues increased 24.4% to $7.5 million, driven by higher royalties. Sales by international franchise stores rose 11.4% to $115 million (9.3% excluding the effects of foreign exchange rate changes). International Franchise segment revenues for the quarter include approximately $0.9 million 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; similar collections from the same franchisee recorded as revenue in the second quarter of fiscal 2014 were approximately $0.3 million. Constant currency same store sales at international franchise stores fell 2.4% in the quarter compared to a decline of 7.1% in the second quarter last year, continuing the overall trend of improving same store sales internationally in recent years. International Franchise segment operating income was $5.1 million compared to $4.2 million in the second quarter last year.

KK Supply Chain revenues (including sales to Company stores) rose 4.0% to $59.5 million; external KK Supply Chain revenues rose 10.5% to $31.2 million. KK Supply Chain generated operating income of $8.5 million in the second quarter of fiscal 2015 compared to $9.0 million last year. KK Supply Chain operating income in the second quarter of fiscal 2015 includes approximately $1.3 million of realized and unrealized losses on agricultural derivative positions, compared to approximately $0.4 million of losses in the second quarter last year.

Full Year Outlook

Based on year-to-date results and other current information, management is reaffirming its forecast of adjusted net income for fiscal 2015 of between $48 million and $51 million ($0.69 to $0.74 per share). Achievement of this forecast would represent a year-over-year increase in adjusted earnings per share of between 13% and 21% from the $0.61 reported for fiscal 2014 which was, in turn, up 30% from fiscal 2013.

Conference Call

The Company will host a conference call to review results for the second quarter as well as its outlook for the balance of the year this afternoon at 4:30 p.m. (ET). A 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) 312- 5514 or, for international callers, by dialing (970) 315-0452. An archived replay of the call will be available shortly after its conclusion by dialing (855) 859-2056, or (404) 537-3406 for international callers; the passcode is 84314242. The audio replay will be available through September 16, 2014. A transcript of the conference call also will be available on the Company’s 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, there are over 880 Krispy Kreme shops in more than 20 countries around the world. Connect with Krispy Kreme at www.krispykreme.com.

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 domestic and international growth strategies; 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 the use and implementation of information technology. 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 3,   August 4,   August 3,   August 4,
        2014     2013     2014     2013  
        (In thousands, except per share amounts)
                             
Revenues   $ 120,516     $ 112,729     $ 242,096     $ 233,354  
Operating expenses:                        
  Direct operating expenses (exclusive of depreciation and                        
  amortization expense shown below)     101,084       93,806       196,256       190,364  
  General and administrative expenses     6,737       5,655       13,784       11,710  
  Depreciation and amortization expense     3,033       2,664       6,206       5,484  
  Impairment charges and lease termination costs     38       4       46       12  
Operating income     9,624       10,600       25,804       25,784  
Interest income     64       70       235       131  
Interest expense     (162 )     (354 )     (305 )     (791 )
Loss on retirement of debt     -       (967 )     -       (967 )
Equity in losses of equity method franchisees     (61 )     (60 )     (118 )     (113 )
Other non-operating income and (expense), net     152       (1 )     320       (6 )
Income before income taxes     9,617       9,288       25,936       24,038  
Provision for income taxes     3,865       4,571       10,528       11,322  
Net income   $ 5,752     $ 4,717     $ 15,408     $ 12,716  
                             
Earnings per common share:                        
  Basic   $ 0.09     $ 0.07     $ 0.23     $ 0.19  
  Diluted   $ 0.08     $ 0.07     $ 0.22     $ 0.18  
                             
Weighted average shares outstanding:                        
  Basic     66,008       67,267       66,265       67,139  
  Diluted     68,725       71,089       69,236       70,833  

 

KRISPY KREME DOUGHNUTS, INC.
                 
CONSOLIDATED BALANCE SHEET
 
                 
        August 3,   February 2,
      2014     2014  
        (In thousands)
  ASSETS
CURRENT ASSETS:            
Cash and cash equivalents   $ 35,680     $ 55,748  
Receivables     28,391       25,268  
Receivables from equity method franchisees     739       675  
Inventories     16,954       16,750  
Deferred income taxes     23,774       23,847  
Other current assets     7,736       5,199  
  Total current assets     113,274       127,487  
Property and equipment     103,780       92,823  
Investments in equity method franchisees     -       -  
Goodwill and other intangible assets     30,432       24,097  
Deferred income taxes     74,146       83,461  
Other assets     11,192       10,678  
  Total assets   $ 332,824     $ 338,546  
   
  LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:            
Current portion of lease obligations   $ 328     $ 344  
Accounts payable     16,049       16,788  
Accrued liabilities     28,671       29,276  
  Total current liabilities     45,048       46,408  
Lease obligations, less current portion     5,263       1,659  
Other long-term obligations and deferred credits     25,923       25,386  
                 
Commitments and contingencies            
                 
SHAREHOLDERS’ EQUITY:            
Preferred stock, no par value     -       -  
Common stock, no par value     314,224       338,135  
Accumulated other comprehensive income     -       -  
Accumulated deficit     (57,634 )     (73,042 )
  Total shareholders’ equity     256,590       265,093  
    Total liabilities and shareholders’ equity   $ 332,824     $ 338,546  

 

KRISPY KREME DOUGHNUTS, INC.
                   
CONSOLIDATED STATEMENT OF CASH FLOWS
 
                   
          Six Months Ended
          August 3,   August 4,
        2014     2013  
            (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income $ 15,408     $ 12,716  
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization expense   6,206       5,484  
Deferred income taxes   9,388       10,050  
Accrued rent expense   324       411  
Loss on retirement of debt   -       967  
(Gain) loss on disposal of property and equipment   99       (62 )
(Gain) on refranchising   -       (876 )
Share-based compensation   2,207       1,867  
Provision for doubtful accounts   174       (63 )
Amortization of deferred financing costs   54       231  
Equity in losses of equity method franchisees   118       113  
Unrealized losses on agricultural derivative positions   121       150  
Other   6       52  
Change in assets and liabilities:          
Receivables   (4,197 )     (464 )
Inventories   (80 )     (2,889 )
Other current and non-current assets   (2,259 )     918  
Accounts payable and accrued liabilities   229       (2,378 )
Other long-term obligations and deferred credits   (111 )     1,241  
Net cash provided by operating activities   27,687       27,468  
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of property and equipment   (13,063 )     (12,362 )
Proceeds from disposals of property and equipment   196       623  
Proceeds from refranchising   -       681  
Business acquisition, net of cash acquired   (7,152 )     -  
Other investing activities   427       433  
Net cash used for investing activities   (19,592 )     (10,625 )
CASH FLOWS FROM FINANCING ACTIVITIES:          
Repayment of long-term debt and lease obligations   (200 )     (24,455 )
Deferred financing costs   -       (87 )
Proceeds from exercise of stock options   6,655       1,686  
Repurchase of common shares   (34,618 )     -  
Net cash used for financing activities   (28,163 )     (22,856 )
Net decrease in cash and cash equivalents   (20,068 )     (6,013 )
Cash and cash equivalents at beginning of period   55,748       66,332  
Cash and cash equivalents at end of period $ 35,680     $ 60,319  

KRISPY KREME DOUGHNUTS, INC.

NON-GAAP FINANCIAL INFORMATION

As of February 2, 2014, the Company had net deferred income tax assets of approximately $107 million, of which approximately $58 millionrelated to federal and state net operating loss carryovers. The Company’s federal net operating loss carryovers totaled approximately $174 million.

The Company has reported cumulative pretax income of over $120 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 provision for income tax expense has substantially exceeded 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.

In the second quarter of fiscal 2014, the Company recorded a charge of $1.0 million related to the retirement 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 of adjusted net income to GAAP net income 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 3,   August 4,   August 3,   August 4,
        2014   2013   2014   2013
        (In thousands, except per share amounts)
                             
Net income, as reported   $ 5,752   $ 4,717   $ 15,408   $ 12,716
Loss on retirement of debt     -     967     -     967
Provision for deferred income taxes     3,226     3,945     9,388     10,050
Adjusted net income   $ 8,978   $ 9,629   $ 24,796   $ 23,733
                             
Adjusted earnings per common share:                        
Basic   $ 0.14   $ 0.14   $ 0.37   $ 0.35
Diluted   $ 0.13   $ 0.14   $ 0.36   $ 0.34
                             
Weighted average shares outstanding:                        
Basic     66,008     67,267     66,265     67,139
Diluted     68,725     71,089     69,236     70,833

 

      Management's Earnings Guidance   Historical Period
      Year Ending February 1, 2015   Year Ended
      From   To   February 2, 2014
      (In thousands, except per share amounts)
                     
Net income, as reported $ 30,200   $ 32,000   $ 34,256
Loss on retirement of debt   -     -     967
Provision for deferred income taxes   17,800     19,000     8,014
Adjusted net income $ 48,000   $ 51,000   $ 43,237
                     
Adjusted earnings per common share:                
Basic $ 0.73   $ 0.77   $ 0.64
Diluted $ 0.69   $ 0.74   $ 0.61
                     
Weighted average shares outstanding:                
Basic   66,200     66,200     67,261
Diluted   69,200     69,200     71,054

 

KRISPY KREME DOUGHNUTS, INC.
                                     
SEGMENT INFORMATION
                         
                Three Months Ended   Six Months Ended
                August 3,   August 4,   August 3,   August 4,
                2014     2013     2014     2013  
                (In thousands)
Revenues:                        
  Company Stores:                        
    On-premises sales:                        
      Retail sales   $ 36,124     $ 33,581     $ 72,231     $ 69,598  
      Fundraising sales     2,696       2,559       7,675       7,336  
      Total on-premises sales     38,820       36,140       79,906       76,934  
    Wholesale sales     39,715       39,549       79,077       80,676  
    Company Stores revenues     78,535       75,689       158,983       157,610  
  Domestic Franchise     3,296       2,799       6,795       5,670  
  International Franchise     7,534       6,057       14,115       12,502  
  KK Supply Chain:                        
        Total revenues     59,503       57,201       119,815       117,012  
        Less – intersegment sales elimination     (28,352 )     (29,017 )     (57,612 )     (59,440 )
        External KK Supply Chain revenues     31,151       28,184       62,203       57,572  
        Total revenues   $ 120,516     $ 112,729     $ 242,096     $ 233,354  
                                     
Operating income:                        
  Company Stores   $ 1,261     $ 1,790     $ 5,677     $ 7,104  
  Domestic Franchise     1,900       1,526       4,056       2,965  
  International Franchise     5,111       4,239       9,391       8,770  
  KK Supply Chain     8,489       8,999       21,243       19,238  
        Total segment operating income     16,761       16,554       40,367       38,077  
  General and administrative expenses     (6,737 )     (5,655 )     (13,784 )     (11,710 )
  Corporate depreciation and amortization expense     (362 )     (295 )     (733 )     (571 )
  Impairment charges and lease termination costs     (38 )     (4 )     (46 )     (12 )
        Consolidated operating income   $ 9,624     $ 10,600     $ 25,804     $ 25,784  
                                     
Depreciation and amortization expense:                        
  Company Stores   $ 2,457     $ 2,174     $ 5,041     $ 4,528  
  Domestic Franchise     49       22       95       36  
  International Franchise     2       1       3       4  
  KK Supply Chain     163       172       334       345  
  Corporate     362       295       733       571  
        Total depreciation and amortization expense   $ 3,033     $ 2,664     $ 6,206     $ 5,484  

 

KRISPY KREME DOUGHNUTS, INC.
                                           
SELECTED OPERATING STATISTICS
                               
              August 3,   May 4,   February 2,   November 3,
              2014 2014   2014   2013
                                           
Systemwide Store Count:                                
  Company stores     103         97         95         94    
  Domestic Franchise stores     160         163         159         155    
  International Franchise stores     621         595         574         563    
                884         855         828         812    
                                           
              Three Months Ended   Six Months Ended
              August 3,   August 4,   August 3,   August 4,
            2014 2013   2014 2013
                                 
Systemwide Sales (in thousands):(1)                                
  Company stores   $ 77,806       $ 74,893       $ 157,624       $ 156,014    
  Domestic Franchise stores     84,096         78,616         171,807         159,602    
  International Franchise stores     114,706         102,971         229,217         213,226    
  International Franchise stores, in constant dollars(2)     114,706         104,958         229,217         213,137    
                                           
Change in Same Store Sales (on-premises sales only):(3)                                
  Company stores     1.1   %     10.5   %     (0.2 ) %     11.4   %
  Domestic Franchise stores     3.8   %     12.0   %     4.2   %     11.9   %
  International Franchise stores     (1.0 ) %     (11.2 ) %     (2.8 ) %     (9.6 ) %
  International Franchise stores, in constant dollars(2)     (2.4 ) %     (7.1 ) %     (2.3 ) %     (5.8 ) %
                                           
Company Stores - change in same store sales attributable to:                                
  Retail pricing     1.8   %     3.8   %     2.1   %     3.3   %
  Guest check average (exclusive of pricing)     (1.4 )       (0.5 )       (1.1 )       (0.4 )  
  Customer count     0.7         7.3         (1.6 )       8.4    
  Fundraising pricing     0.5         -         0.5         -    
  Other     (0.5 )       (0.1 )       (0.1 )       0.1    
  Total     1.1   %     10.5   %     (0.2 ) %     11.4   %
                                           
Change in Same Store Customer Count - Company stores                                
  (retail sales only)     0.8   %     8.0   %     (1.8 ) %     9.7   %
                                           
Average guest check - Company stores (retail sales only)   $ 7.67       $ 7.68       $ 7.56       $ 7.49    
                                           
Company stores - store operating weeks     1,289         1,221         2,523         2,439    
                                           
Wholesale Metrics - Company stores:(4)                                
  Grocers/mass merchants:                                
  Change in average weekly number of doors     0.4   %     (5.4 ) %     (1.4 ) %     (4.8 ) %
  Change in average weekly sales per door     (0.3 ) %     9.6   %     (0.6 ) %     12.5   %
  Convenience stores:                                
  Change in average weekly number of doors     4.4   %     0.7   %     3.5   %     (0.9 ) %
  Change in average weekly sales per door     (4.6 ) %     6.5   %     (4.9 ) %     6.9   %

(1) Systemwide sales, a non-GAAP financial measure, include sales by both Company and franchise Krispy Kreme stores. The Company believes systemwide sales data are useful in assessing consumer demand for the Company’s products, the overall success of the Krispy Kreme brand and, ultimately, the performance of the Company. All of the Company’s royalty revenues are computed as percentages of sales made by the Company’s domestic and international franchisees, and substantially all of KK Supply Chain’s external sales of doughnut mixes and other ingredients ultimately are determined by demand for the Company’s products at franchise stores. Accordingly, sales by the Company’s franchisees have a direct effect on the Company’s royalty and KK Supply Chain revenues, and therefore on the Company’s profitability. 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 78 consecutive weeks during the current year period (but only to the extent such sales occurred in the 79th 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 79 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 3, 2014                
May 4, 2014   78   18   1   97
Opened   1   -   -   1
Closed   -   -   -   -
Change in store type   1   (1)   -   -
Transferred from Domestic Franchise   2   3   -   5
August 3, 2014   82   20   1   103
                 
Six months ended August 3, 2014                
February 2, 2014   76   18   1   95
Opened   3   -   -   3
Closed   -   -   -   -
Change in store type   1   (1)   -   -
Transferred from Domestic Franchise   2   3   -   5
August 3, 2014   82   20   1   103
                 
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

 

KRISPY KREME DOUGHNUTS, INC.
                 
STORE COUNT
                 
    Number of Domestic Franchise Stores
    Factory            
    Stores Hot Shops Fresh Shops Total
                 
Three months ended August 3, 2014                
May 4, 2014   109   40   14   163
Opened   2   1   -   3
Closed   -   -   (1)   (1)
Transferred to Company Stores   (2)   (3)   -   (5)
August 3, 2014   109   38   13   160
                 
Six months ended August 3, 2014                
February 2, 2014   107   37   15   159
Opened   4   4   -   8
Closed   -   -   (2)   (2)
Transferred to Company Stores   (2)   (3)   -   (5)
August 3, 2014   109   38   13   160
                 
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

 

KRISPY KREME DOUGHNUTS, INC.
                     
STORE COUNT
                     
    Number of International Franchise Stores
    Factory                
  Stores   Hot Shops   Fresh Shops   Kiosks   Total
                     
Three months ended August 3, 2014                    
May 4, 2014   126   9   310   150   595
Opened   3   -   20   7   30
Closed   (1)   -   (3)   -   (4)
August 3, 2014   128   9   327   157   621
                     
Six months ended August 3, 2014                    
February 2, 2014   125   9   296   144   574
Opened   5   -   34   14   53
Closed   (2)   -   (3)   (1)   (6)
August 3, 2014   128   9   327   157   621
                     
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 

Source: Krispy Kreme Doughnuts, Inc.

Contacts:

Lafeea Watson
Krispy Kreme
Media Relations
336-726-8878
lwatson@krispykreme.com

Anita K. Booe
Krispy Kreme
Investor Relations
336-703-6902
abooe@krispykreme.com

###

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