WINSTON-SALEM N.C. Krispy Kreme Doughnuts Inc. narrowed its third-quarter net loss on reduced impairment charges, lower interest expense and positive same-store sales, which the company has been able to log each quarter this year.
For the quarter ended Nov. 1, Krispy Kreme posted a net loss of $2.4 million, or 4 cents per share, compared with a year-ago loss of $5.9 million, or 9 cents per share. A year ago, Krispy Kreme booked about $345,000 in lease termination and impairment charges, as well a charge of about $900,000 related to a loan to a franchisee. In the latest quarter, impairment charges were reduced to $109,000.
Revenue for third quarter totaled $83.6 million, down 11 percent from the same quarter a year ago. The reduction is mainly because of a reduced number of corporate locations. Krispy Kreme has been reducing its domestic store count for years through the closure of underperforming unit and a near halt to expansion.
Same-store sales, however, have turned around. Third quarter same-store sales increased 5.1 percent, following gains of 5.9 percent in the second quarter and 2.1 percent in the first quarter. The upswing is based on comparisons to a year ago, when the chain still was posting negative comparable sales.
“Our improved results are evidence of progress in implementing our strategic initiatives, which have us on a path toward building a growing, profitable business that is sustainable for the long term,” said Jim Morgan, Krispy Kreme’s president and chief executive.
The company also reported some domestic growth with the opening of two new corporate retail shops, and signed letters of intent for five additional retail shop leases in Virginia and Tennessee. U.S. franchisees opened two stores during the quarter, one in Arizona and the other in Pennsylvania. For nearly two years, Krispy Kreme has only seen unit growth in international markets, as the number of domestic locations was cut and many franchisees ceased expansion.
International expansion during the third quarter included the opening of 15 Krispy Kreme in such locations as Turkey, Thailand and the Dominican Republic. Krispy Kreme and its franchisees operate 563 locations worldwide.