Another solid quarterly earnings performance by Krispy Kreme Doughnuts Inc. has turned the talk about its fiscal year 2011 performance from whether it will turn a profit to how big will it be.
It posted $2.4 million in net income during its third quarter, which ended Oct. 31. By comparison, it had a loss of $2.4 million in the third quarter of 2010.
With net income of $9.1 million and operating income of $14.3 million through three quarters, the company appears likely — barring an unforeseen major sales decline — to have its first profitable year since 2004.
Krispy Kreme expressed confidence in that outcome by increasing its operating-income outlook for the third time to a range of $17 million to $20 million — up from $13 million to $17 million on Sept. 2.
Those projections exclude impairment charges and lease-termination costs.
Krispy Kreme posted higher revenue in all four main categories — company stores, domestic franchises, international franchises and supply chain.
Management’s ability to deal with growth issues while maintaining profitability is increasing confidence in the company, said Peter Tourtellot, the managing director of Anderson Bauman Tourtellot Vos & Co., a turnaround-management company in Greensboro.
“It appears their turnaround is now well under way, and we should expect more of the same into 2011,” he said.
Jim Morgan, the chief executive and president, said that Krispy Kreme plans to open between five and 10 company stores in fiscal 2012, and between five and 15 domestic franchise stores and more than 30 international franchise stores.
Because commodity prices are projected to rise significantly in fiscal 2012, the company is evaluating whether it will need to raise its prices, and if so, by how much.
rcraver@wsjournal.com
727-7376
Email
Facebook
Google
Twitter
Favorites
More
Advertisement