Krispy Kreme Reports Financial Results for the Fourth Quarter and Fiscal Year Ended February 1, 2015

Reaffirms Fiscal 2016 Adjusted EPS Outlook of $0.79 to $0.85

WINSTON-SALEM, N.C. - (BUSINESS WIRE) - Mar. 11, 2015 - Krispy Kreme Doughnuts, Inc. (NYSE:KKD) (the “Company”) today reported financial results for the fourth quarter and fiscal year ended February 1, 2015, and reaffirmed its adjusted EPS outlook for fiscal 2016 (ending January 31, 2016).

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

  • Revenues increased 11.2% to $125.4 million from $112.7 million
  • Systemwide store count rose 6.7% in the quarter to 987 Company and franchise shops worldwide
  • Systemwide domestic same store sales rose 3.6%, including a 1.7% gain at Company shops; constant-currency international franchise same store sales declined 2.6%
  • Adjusted net income rose 36.3% to $11.4 million ($0.17 per share) from $8.3 million ($0.12 per share); adjusted net income and adjusted earnings per share are non-GAAP measures (see the reconciliation of GAAP to adjusted earnings accompanying this release)
  • Net income was $6.5 million ($0.10 per share) compared to $14.8 million ($0.21 per share) last year; net income in the prior year quarter included unusual income tax credits totaling $10.3 million ($0.14 per share)
  • Cash provided by operating activities was $17.2 million compared to $15.9 million last year

Fiscal 2015 Highlights Compared to Last Year:

  • Revenues increased 6.5% to $490.3 million from $460.3 million
  • Systemwide store count rose 19.2% during the year to 987 Company and franchise shops worldwide
  • Systemwide domestic same store sales rose 3.1%, including a 1.2% gain at Company shops; constant-currency international franchise same store sales declined 2.6%
  • Adjusted net income rose 11.6% to $48.3 million ($0.70 per share) from $43.2 million ($0.61 per share)
  • Net income was $30.1 million ($0.44 per share) compared to $34.3 million ($0.48 per share) last year; net income in the prior year reflected unusual income tax credits totaling $10.3 million ($0.14 per share)
  • Cash provided by operating activities was $62.9 million compared to $56.9 million in fiscal 2014
  • The Company repurchased 2.2 million of its common shares for $39.2 million; $43.4 million remains under the current share repurchase authorization

President and Chief Executive Officer Tony Thompson commented: “We are pleased with the Company’s continuing momentum in fiscal 2015. This past year, we increased adjusted net income by nearly 12%, significantly outpacing our almost 7% revenue growth, and completed our sixth consecutive year of positive same-store sales at Company stores. Systemwide unit count increased over 19%, positioning Krispy Kreme as one of the fastest growing chains within the QSR industry. We are growing again in a disciplined and sustainable manner with a variety of shop formats designed to meet individual market needs. We continue to refine and improve our model to better meet consumer needs and deliver outstanding financial returns.”

Thompson continued: “In the fourth quarter, we scaled back our promotional incentive activities, which had a positive effect on Company shop operating margins. We also achieved two significant development milestones – eight Company store openings in a single quarter, which is more than we have opened annually in any each year since 2005, and a record 57 international franchise store openings in 13 countries.”

Thompson concluded: “Realizing our vision for the Krispy Kreme brand is predicated on four key business drivers: accelerating global growth; leveraging technology; enhancing our core menu; and maximizing brand awareness. We are executing across all of these areas with the underlying goals of spreading the joy of Krispy Kreme and positioning ourselves for further value creation for our shareholders. Fiscal 2016 began with another important milestone, our 1,000th store worldwide celebration, which is a great way to start what we believe will be another year of sustainable growth at Krispy Kreme.”

Results for the Quarter Ended February 1, 2015

Consolidated Results

For the quarter ended February 1, 2015, revenues rose 11.2% to $125.4 million.

Direct operating expenses increased to $102.3 million from $93.3 million, but as a percentage of total revenues declined to 81.6% from 82.8%.

General and administrative expenses were $9.2 million (7.4% of revenues) compared to $7.7 million (6.8% of revenues) in the year-ago period. General and administrative expenses in fiscal 2015 include a $2.5 million charge for the settlement of amounts due under an employment agreement with the Company’s former chief executive officer. A reduction in share-based compensation costs due principally to a change in the timing of equity awards was partially offset by higher provisions for incentive compensation.

Operating income rose 5.4% to $9.6 million ($12.0 million exclusive of the $2.5 million contract settlement charge in fiscal 2015, or 32.6% over the fourth quarter last year).

Adjusted net income rose 36.3% to $11.4 million ($0.17 per share) compared to $8.3 million ($0.12 per share), in the fourth quarter last year. Adjusted net income and adjusted EPS are non-GAAP measures (see the reconciliation of GAAP to adjusted earnings accompanying this release).

Segment Results

For the quarter ended February 1, 2015, Company Stores revenues increased 12.7% to $83.7 million, while same store sales rose 1.7%. The Company Stores segment posted operating income of $1.4 million compared to $1.6 million last year. The Company opened eight new factory shops in the fourth quarter. Preopening and other start-up costs related to new shops, including shops not yet opened, were approximately $1.3 million in the fourth quarter of fiscal 2015 compared to approximately $150,000 in the fourth quarter last year. The segment’s results for the fourth quarter of fiscal 2015 also reflect charges of approximately $1.0 million for mark-to-market adjustments on wholesale gasoline futures contracts entered into in the fourth quarter to hedge the cost of fuel purchases for fiscal 2016 and 2017. The Company has not designated these derivative contacts as cash flow hedges and, accordingly, changes in their fair values are reflected in earnings as they occur. While a decline in gasoline prices resulted in the fourth quarter mark-to-market charge, significantly lower gasoline prices are expected to benefit fiscal 2016 operating costs and are reflected in management’s earnings outlook.

Domestic Franchise revenues increased 7.6% to $3.4 million, while same store sales rose 4.7%. Domestic Franchise segment operating income was $2.1 million compared to $2.0 million last year.

International Franchise revenues increased 10.6% to $7.6 million, driven by higher royalties and a net 53 shop openings in the quarter. Sales by international franchise shops rose 9.0% to $128 million (16.2% excluding the effects of foreign exchange rate changes), while constant currency same store sales fell 2.6%. International Franchise segment operating income was $5.6 million compared to $4.8 million in the fourth quarter last year.

KK Supply Chain revenues (including sales to Company stores) increased 13.2% to $63.3 million. KK Supply Chain generated operating income of $11.1 million compared to $8.6 million in the fourth quarter last year.

Fiscal 2016 Outlook

Management is reaffirming its outlook for adjusted net income for fiscal 2016 of between $55 million and $59 million ($0.79 to $0.85 per share), compared to $48.3 million ($0.70 per share) in fiscal 2015.

The Company’s outlook reflects, among other things, the following assumptions:

  • 10 to 15 net new Company shops
  • 10 to 20 net new domestic franchise shops
  • 95 to 110 net new international franchise shops
  • Capital expenditures of between $35 million and $45 million including ongoing investments in technology
  • Continued growth in domestic same store sales
  • A reduction in agricultural commodity and fuel costs compared to fiscal 2015
  • Negative effects of a stronger U.S. dollar

Conference Call

The Company will host a conference call to review fiscal 2015 fourth quarter and annual results, as well as management’s outlook for fiscal 2016, 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) 407-0784 or, for international callers, by dialing (201) 689-8560. An archived replay of the call will be available shortly after its conclusion by dialing (877) 870-5176, or (858) 384-5517 for international callers; the passcode is 13601290. The audio replay will be available through March 18, 2015. A transcript of the conference call 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, N.C., the Company has offered the highest quality doughnuts and great tasting coffee since it was founded in 1937. Today, there are over 980 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 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 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
(Unaudited)
                             
        Three Months Ended   Year Ended
        February 1,   February 2,   February 1,   February 2,
        2015   2014   2015   2014
        (In thousands, except per share amounts)
                             
Revenues   $ 125,367     $ 112,746     $ 490,334     $ 460,331  
Operating expenses:                        
  Direct operating expenses (exclusive of depreciation and                        
    amortization expense shown below)     102,323       93,302       399,744       376,132  
  General and administrative expenses     9,221       7,709       28,558       25,149  
  Depreciation and amortization expense     3,354       2,834       12,840       11,106  
  Impairment charges and lease termination costs     905       (169 )     955       1,374  
Operating income     9,564       9,070       48,237       46,570  
Interest income     109       144       406       616  
Interest expense     (321 )     (135 )     (856 )     (1,057 )
Loss on retirement of debt     -       -       -       (967 )
Equity in losses of equity method franchisees     53       (47 )     (118 )     (221 )
Other non-operating income and (expense), net     136       96       547       119  
Income before income taxes     9,541       9,128       48,216       45,060  
Provision for income taxes     2,995       (5,632 )     18,156       10,804  
Net income   $ 6,546     $ 14,760     $ 30,060     $ 34,256  
                             
Earnings per common share:                        
  Basic   $ 0.10     $ 0.22     $ 0.45     $ 0.51  
  Diluted   $ 0.10     $ 0.21     $ 0.44     $ 0.48  
                             
Weighted average shares outstanding:                        
  Basic     66,503       67,222       66,360       67,261  
  Diluted     68,590       71,045       68,929       71,054  
                                   

 

             
KRISPY KREME DOUGHNUTS, INC.
                 
CONSOLIDATED BALANCE SHEET
(Unaudited)
                 
        February 1,   February 2,
      2015   2014
        (In thousands)
  ASSETS
CURRENT ASSETS:            
Cash and cash equivalents   $ 50,971     $ 55,748  
Receivables     27,799       25,268  
Receivables from equity method franchisees     782       675  
Inventories     18,194       16,750  
Deferred income taxes     23,245       23,847  
Other current assets     6,856       5,199  
  Total current assets     127,847       127,487  
Property and equipment     115,758       92,823  
Investments in equity method franchisees     -       -  
Goodwill and other intangible assets     30,070       24,097  
Deferred income taxes     68,278       83,461  
Other assets     10,760       10,678  
  Total assets   $ 352,713     $ 338,546  
   
  LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:            
Current portion of lease obligations   $ 333     $ 344  
Accounts payable     17,095       16,788  
Accrued liabilities     32,530       29,276  
  Total current liabilities     49,958       46,408  
Lease obligations, less current portion     9,354       1,659  
Other long-term obligations and deferred credits     25,615       25,386  
                 
Commitments and contingencies            
                 
SHAREHOLDERS’ EQUITY:            
Preferred stock, no par value     -       -  
Common stock, no par value     310,768       338,135  
Accumulated other comprehensive income     -       -  
Accumulated deficit     (42,982 )     (73,042 )
  Total shareholders’ equity     267,786       265,093  
    Total liabilities and shareholders’ equity   $ 352,713     $ 338,546  
                     

 

             
KRISPY KREME DOUGHNUTS, INC.
                     
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
                     
            Year Ended
            February 1,   February 2,
          2015   2014
              (In thousands)
CASH FLOW FROM OPERATING ACTIVITIES:            
Net income   $ 30,060     $ 34,256  
Adjustments to reconcile net income to net cash provided by operating activities:            
  Depreciation and amortization expense     12,840       11,106  
  Deferred income taxes     15,729       8,014  
  Impairment charges     901       -  
  Accrued rent expense     789       784  
  Loss on retirement of debt     -       967  
  (Gain) loss on disposal of property and equipment     238       (1,879 )
  (Gain) on refranchising     (1,247 )     (876 )
  Share-based compensation     4,466       6,452  
  Provision for doubtful accounts     90       (345 )
  Amortization of deferred financing costs     108       285  
  Equity in losses of equity method franchisees     118       221  
  Unrealized losses on commodity derivative positions     1,498       298  
  Other     23       27  
  Change in assets and liabilities:            
    Receivables     (3,962 )     556  
    Inventories     (1,343 )     (4,553 )
    Other current and non-current assets     (2,358 )     1,917  
    Accounts payable and accrued liabilities     4,867       (1,913 )
    Other long-term obligations and deferred credits     57       1,595  
      Net cash provided by operating activities     62,874       56,912  
CASH FLOW FROM INVESTING ACTIVITIES:            
Purchase of property and equipment     (31,447 )     (23,419 )
Proceeds from disposals of property and equipment     2,341       1,719  
Proceeds from refranchising     1,847       681  
Acquisition of stores from franchisees     (7,152 )     (1,603 )
Other investing activities     766       456  
      Net cash used for investing activities     (33,645 )     (22,166 )
CASH FLOW FROM FINANCING ACTIVITIES:            
Repayment of long-term debt and lease obligations     (384 )     (24,658 )
Deferred financing costs     -       (132 )
Proceeds from exercise of stock options     10,259       2,517  
Repurchase of common shares     (43,881 )     (23,057 )
      Net cash used for financing activities     (34,006 )     (45,330 )
Net decrease in cash and cash equivalents     (4,777 )     (10,584 )
Cash and cash equivalents at beginning of year     55,748       66,332  
Cash and cash equivalents at end of year   $ 50,971     $ 55,748  
                     
Supplemental schedule of non-cash investing and financing activities:            
    Assets acquired under leasing arrangements   $ 8,045     $ 918  
                     

KRISPY KREME DOUGHNUTS, INC.

NON-GAAP FINANCIAL INFORMATION

(Unaudited)

As of February 1, 2015, the Company had net deferred income tax assets of approximately $92 million, of which approximately $44 million related to federal and state net operating loss carryovers. The Company’s federal net operating loss carryovers totaled approximately $159 million.

The Company has reported cumulative pretax income of over $160 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.

The Company recorded a pretax charge of approximately $2.5 million in the fourth quarter of fiscal 2015 for the settlement of amounts due under an employment agreement with the Company’s former chief executive officer. That officer, who was most recently the Company’s Executive Chairman, transitioned from that role to the non-employee role of non-executive chairman of the board of directors in late January 2015. 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.

      Management's   Historical Periods
      Earnings Outlook   Three Months Ended   Year Ended
      Year Ending January 31, 2016   February 1,   February 2,   February 1,   February 2,
      From   To   2015   2014     2015   2014
      (In thousands, except per share amounts)
                                       
Net income, as reported $ 34,800   $ 37,200   $ 6,546   $ 14,760     $ 30,060   $ 34,256
Charge for settlement of employment                                  
  contract   -     -     2,464     -       2,464     -
Loss on retirement of debt   -     -     -     -       -     967
Provision for deferred income taxes   20,200     21,800     2,348     (6,424 )     15,729     8,014
Adjusted net income $ 55,000   $ 59,000   $ 11,358   $ 8,336     $ 48,253   $ 43,237
                                       
Adjusted earnings per common share:                                  
  Basic $ 0.82   $ 0.88   $ 0.17   $ 0.12     $ 0.73   $ 0.64
  Diluted $ 0.79   $ 0.85   $ 0.17   $ 0.12     $ 0.70   $ 0.61
                                       
Weighted average shares outstanding:                                  
  Basic   66,800     66,800     66,503     67,222       66,360     67,261
  Diluted   69,500     69,500     68,590     71,045       68,929     71,054
                                       

 

                         
KRISPY KREME DOUGHNUTS, INC.
                                   
SEGMENT INFORMATION
(Unaudited)
                           
              Three Months Ended   Year Ended
              February 1,   February 2,   February 1,   February 2,
              2015   2014   2015   2014
              (In thousands)
Revenues:                        
  Company Stores:                        
    On-premises sales:                        
      Retail sales   $ 42,235     $ 34,590     $ 151,956     $ 136,921  
      Fundraising sales     2,829       2,782       15,406       14,591  
        Total on-premises sales     45,064       37,372       167,362       151,512  
    Wholesale sales     38,680       36,957       157,944       155,313  
          Company Stores revenues     83,744       74,329       325,306       306,825  
  Domestic Franchise     3,381       3,143       13,450       11,839  
  International Franchise     7,631       6,900       28,598       25,607  
  KK Supply Chain:                        
    Total revenues     63,292       55,913       244,688       231,229  
    Less – intersegment sales elimination     (32,681 )     (27,539 )     (121,708 )     (115,169 )
      External KK Supply Chain revenues     30,611       28,374       122,980       116,060  
          Total revenues   $ 125,367     $ 112,746     $ 490,334     $ 460,331  
                                   
Operating income:                        
  Company Stores   $ 1,377     $ 1,631     $ 9,287     $ 11,334  
  Domestic Franchise     2,058       1,962       8,103       8,083  
  International Franchise     5,587       4,758       20,026       17,977  
  KK Supply Chain     11,051       8,617       41,823       36,953  
    Total segment operating income     20,073       16,968       79,239       74,347  
  General and administrative expenses     (9,221 )     (7,709 )     (28,558 )     (25,149 )
  Corporate depreciation and amortization expense     (383 )     (358 )     (1,489 )     (1,254 )
  Impairment charges and lease termination costs     (905 )     169       (955 )     (1,374 )
    Consolidated operating income   $ 9,564     $ 9,070     $ 48,237     $ 46,570  
                                   
Depreciation and amortization expense:                        
  Company Stores   $ 2,782     $ 2,256     $ 10,534     $ 9,039  
  Domestic Franchise     14       47       135       119  
  International Franchise     1       1       5       7  
  KK Supply Chain     174       172       677       687  
  Corporate     383       358       1,489       1,254  
    Total depreciation and amortization expense   $ 3,354     $ 2,834     $ 12,840     $ 11,106  
                                     

 

KRISPY KREME DOUGHNUTS, INC.
                                           
SELECTED OPERATING STATISTICS
(Unaudited)
                                 
              February 1,   November 2,   August 3,   May 4,
              2015   2014   2014   2014
                                           
Systemwide Store Count:                                
  Company stores     111         104         103         97    
  Domestic Franchise stores     167         165         160         163    
  International Franchise stores     709         656         621         595    
                987         925         884         855    
                                           
              Three Months Ended   Year Ended
              February 1,   February 2,   February 1,   February 2,
            2015 2014 2015 2014
                               
Systemwide sales (in thousands):(1)                                
  Company stores   $ 83,037       $ 73,732       $ 322,521       $ 303,973    
  Domestic Franchise stores     83,496         80,537         337,072         317,864    
  International Franchise stores     127,550         116,974         476,364         438,027    
  International Franchise stores, in constant dollars(2)   127,550         109,729         476,364         428,950    
                                           
                                           
Change in same store sales (on-premises sales only):(3)                              
  Company stores     1.7   %     2.4   %     1.2   %     7.4   %
  Domestic Franchise stores     4.7         7.0         4.2         10.4    
  International Franchise stores     (8.1 )       (6.5 )       (4.6 )       (8.0 )  
  International Franchise stores, in constant dollars(2)   (2.6 )       (0.8 )       (2.6 )       (3.3 )  
                                           
Company Stores - change in same store sales attributable to:                                
  Retail menu pricing     1.7   %     3.7   %     1.9   %     3.4   %
  Guest check average (exclusive of menu of pricing)     1.7         (1.7 )       (0.9 )       (0.9 )  
  Customer count     (1.2 )       0.4         0.1         4.7    
  Fundraising pricing     0.5         -         0.6         -    
  Other     (1.0 )       -         (0.5 )       0.2    
    Total     1.7   %     2.4   %     1.2   %     7.4   %
                                           
Change in Same Store Customer Count - Company stores (retail sales only)(3)   (1.3 ) %     0.5   %     0.1   %     5.3   %
                                           
Average guest check - Company stores (retail sales only)   $ 7.66       $ 7.32       $ 7.56       $ 7.47    
                                           
Company Stores - store operating weeks     1,415         1,215         5,284         4,864    
                                           
Wholesale Metrics - Company Stores:(4)                                
  Grocers/mass merchants:                                
    Change in average weekly number of doors     3.5   %     (6.4 ) %     1.5   %     (6.2 ) %
    Change in average weekly sales per door     -         3.4         (0.3 )       9.7    
  Convenience stores:                                
    Change in average weekly number of doors     0.2   %     (0.1 ) %     2.5   %     (0.3 ) %
    Change in average weekly sales per door     0.8         (2.8 )       (2.0 )       3.2    

(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
(Unaudited)
                 
    Number of Company Stores
    Factory            
    Stores Hot Shops Fresh Shops Total
                 
Three months ended February 1, 2015                
November 2, 2014   83     20     1   104  
Opened   8     -     -   8  
Closed   -     (1 )   -   (1 )
Change in store type   1     (1 )   -   -  
February 1, 2015   92     18     1   111  
                 
Year ended February 1, 2015                
February 2, 2014   76     18     1   95  
Opened   13     -     -   13  
Closed   -     (1 )   -   (1 )
Change in store type   2     (2 )   -   -  
Transferred to Domestic Franchise   (1 )   -     -   (1 )
Transferred from Domestic Franchise   2     3     -   5  
February 1, 2015   92     18     1   111  
                 
Three months ended February 2, 2014                
November 3, 2013   75     18     1   94  
Opened   1     -     -   1  
Closed   -     -     -   -  
February 2, 2014   76     18     1   95  
                 
Year ended February 2, 2014                
February 3, 2013   76     20     1   97  
Opened   6     -     -   6  
Closed   (1 )   (1 )   -   (2 )
Change in store type   1     (1 )   -   -  
Transferred to Domestic Franchise   (6 )   -     -   (6 )
February 2, 2014   76     18     1   95  
                       

 

KRISPY KREME DOUGHNUTS, INC.
                 
STORE COUNT
(Unaudited)
                 
    Number of Domestic Franchise Stores
    Factory            
    Stores Hot Shops Fresh Shops Total
                 
Three months ended February 1, 2015                
November 2, 2014   113   39   13   165
Opened   3   -   -   3
Closed   -   -   (1)   (1)
February 1, 2015   116   39   12   167
                 
Year ended February 1, 2015                
February 2, 2014   107   37   15   159
Opened   10   5   -   15
Closed   -   -   (3)   (3)
Transferred from Company Stores   1   -   -   1
Transferred to Company Stores   (2)   (3)   -   (5)
February 1, 2015   116   39   12   167
                 
Three months ended February 2, 2014                
November 3, 2013   106   35   14   155
Opened   1   2   1   4
Closed   -   -   -   -
February 2, 2014   107   37   15   159
                 
Year ended February 2, 2014                
February 3, 2013   99   29   14   142
Opened   2   8   1   11
Closed   -   -   -   -
Transferred from Company stores   6   -   -   6
February 2, 2014   107   37   15   159
                 

 

KRISPY KREME DOUGHNUTS, INC.
                     
STORE COUNT
(Unaudited)
                     
    Number of International Franchise Stores
    Factory                
  Stores   Hot Shops   Fresh Shops   Kiosks   Total
                     
Three months ended February 1, 2015                    
November 2, 2014   133   9   348   166   656
Opened   3   1   32   21   57
Closed   -   -   (2)   (2)   (4)
Change in store type   (3)   (1)   3   1   -
February 1, 2015   133   9   381   186   709
                     
Year ended February 1, 2015                    
February 2, 2014   125   9   296   144   574
Opened   15   1   89   46   151
Closed   (4)   -   (7)   (5)   (16)
Change in store type   (3)   (1)   3   1   -
February 1, 2015   133   9   381   186   709
                     
Three months ended February 2, 2014                    
November 3, 2013   123   9   287   144   563
Opened   6   -   15   5   26
Closed   (3)   -   (7)   (5)   (15)
Change in store type   (1)   -   1   -   -
February 2, 2014   125   9   296   144   574
                     
Year ended February 2, 2014                    
February 3, 2013   120   9   257   123   509
Opened   15   -   53   28   96
Closed   (8)   -   (17)   (6)   (31)
Change in store type   (2)   -   3   (1)   -
February 2, 2014   125   9   296   144   574 

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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