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Krispy Kreme: Single-day promotions boost traffic, sales

Krispy Kreme: Single-day promotions boost traffic, sales

Traffic bumps from one-day events have longer-lasting effects on same-store sales

Krispy Kreme Donuts Inc. reported Monday that company-owned same-store sales for the third quarter increased 6.8 percent year over year, marking the sweets and coffee company’s 16th consecutive quarter of positive same-store sales.

The overall same-store sales increases at Winston-Salem, N.C.-based Krispy Kreme were driven by increased customer foot traffic, said president and chief executive James Morgan.

During a question-and-answer session with analysts, Morgan said that single-day promotions, such as the company’s National Talk Like A Pirate Day offering and its National Coffee Day offering, gave the company some short-term bumps throughout the quarter.

On Pirate Day, Krispy Kreme gave out free donuts to those who talked like pirates or wore an eye patch. On National Coffee Day, the company gave out free 12-ounce cups of coffee.

Morgan described the one-day promotions as “something we’re having fun with.” He added, "Those days are usually good. It’s high, high traffic, as you know…but then the aftereffect seems to last longer than we would have thought.”

For the week of National Coffee Day, same-store sales rose 4 percent, according to the company's chief financial officer, Douglas Muir. During the week of the pirate holiday, same-store sales rose 6 percent.

Morgan said he expects 2013 to be a “banner year for Krispy Kreme," noting, "there’s still lots of room for growth." He also cited Krispy Kreme’s domestic consumer research, which showed that customers “will buy more donuts if we provide them with reasons to do so.” So, he said, Krispy Kreme hopes to continue to grow by doing just that.

“Our immediate focus remains on enhancing our core doughnut offerings, continuing to enhance the doughnut experience and creating more doughnut use occasions,” he said, adding that the company will continue to focus on its coffee offerings, too.

During the quarter ending Oct. 28, Krispy Kreme reported its net income increased to $5 million from $4.7 million a year earlier, and net income per share remained steady at 7 cents per share. The company also reported $107.1 million in revenue, an 8.5-percent increase from $98.7 million a year earlier.

Same-store sales increased 5 percent for domestic franchised locations. Muir said same-store sales dropped 7.7 percent at the company’s international franchised locations, while revenue for those same locations increased 12.1 percent to $6 million, year over year, due to higher royalties.

The same-store sales drop in the international market reflected “among other things, a honeymoon effect from the substantial number of international store openings in recent years, as well as cannibalization as markets develop,” Muir said.

Krispy Kreme opened 20 new units during the quarter, bringing the company’s total store count to 731 worldwide. More than 85 percent of Krispy Kreme’s system is franchised.

Contact Erin Dostal at [email protected].
Follow her on Twitter: @erindostal


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