WINSTON-SALEM N.C. The Krispy Kreme turnaround has hit a snag. Following the recent bankruptcies of two franchisees, Krispy Kreme Doughnuts Inc. reported Thursday a significantly wider second-quarter net loss versus a year earlier, on a fall in revenue and large impairment charges.
The company's net loss for the second quarter of its fiscal 2008 was $27 million, or 42 cents per share, compared with a loss of $4.6 million, or 7 cents per share, in the year-earlier quarter.
Revenue for the operator or franchisor of 411 Krispy Kreme restaurants decreased 7.5 percent from a year ago to $104.1 million.
For the three months ended July 29, impairment charges and lease termination costs totaled $22.1 million, compared with $382,000 in the second quarter of fiscal 2007, the company reported.
During the second quarter, 19 Krispy Kreme units were opened and 12 were closed, the company reported. The net increase of seven locations reflects a net increase of 13 international units and a net decrease of 6 domestic restaurants.
The company's Thursday earnings report came on the heels of two franchisees that each filed for Chapter 11 bankruptcy protections, one in California and the other in St. Louis. Krispy Kreme acknowledged that "several franchisees have been experiencing financial pressures, which, in certain instances, appear to have become more exacerbated during the second quarter."
The company reported that franchisees closed 13 locations in the first six months of fiscal 2008, and that the closure of a "significant number" of additional franchised units is likely during the rest of the company's fiscal year ending in January.