Krispy Kreme Shares Soar After Record Earnings

Krispy Kreme Shares Soar After Record Earnings

By Chibuike Oguh

Shares in American doughnuts company, Krispy Kreme, rose by more than 17% after the company reported first quarter results that exceeded analysts’ expectations.

Krispy Kreme’s shares climbed to $19.67 on Friday in New York, making it the biggest gain for the doughnut chain since May 2013.

 

Krispy Kreme
Photo credits: Krispy Kreme UK

Profits at the Winston-Salem, North Carolina company rose to $10.7 million or $0.16 per share compared with $9.7 million or $0.14 per share in the first quarter of last year. Adjusted net income rose to $16.6 million or $0.25 per share from $15.8 million or $0.23 per share last year.

The company’s revenues rose by 9% to $132.5 million up from $121.6 million posted last year. Analysts were forecasting earnings of $0.22 per share on revenue of $136 million.

Krispy Kreme’s president and chief executive officer Tony Thompson commented: “Solid domestic same store sales growth and improved margin performance at our Company shops enabled us to exceed our internal projections for the first quarter, providing us a strong start to the fiscal year. Guests continued to respond favorably to our limited time offerings. This, combined with our more strategic use of promotional incentives, drove the higher profitability.”

Company stores revenues rose 12.8% to $90.7 million in the first quarter of fiscal 2016 (ending January 31, 2016). Domestic franchise revenues increased 6% to $3.7 million while international franchise revenues increased 2.2% to $6.7 million. The company’s supply chain revenues (including sales to Company stores) rose 5.3% to $63.5 million.

Krispy-Kreme
Photo credits: Bathrestaurants UK

“Several initiatives now underway seem likely to generate incremental store traffic as well as increase profit margins. We look for sustained rapid earnings growth over the next several years,” Anton Brenner of Roth Capital Partners said. “We reiterate our buy rating,” he added.

Krispy Kreme has revised its fiscal 2016 outlook for adjusted net income per share to between $0.80 and $0.85 per share up from $0.79 and $0.85 per share forecasted earlier.

Shares in Krsipy Kreme have been making a comeback in recent years after an accounting scandal sent the stock crashing from nearly $50 in 2003 to about $1.08 in 2009.

Krispy Kreme has benefited from a new management, international expansion, and a 12 percent equity investment from Kuwait’s Al Karafi family in 2007.