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Krispy Kreme’s Q2 results fall short of expectations

Rising comp sales and revenues were not enough to keep Krispy Kreme from lowering its guidance for the fiscal year after experiencing “disappointing” margins in the second quarter, the doughnut company said Wednesday.

Krispy Kreme’s same-store sales rose 5.5 percent year over year during the quarter ended Aug. 2, while revenues rose 5.7 percent, to $127.3 million.

Net income for the company stayed flat compared to the year-ago quarter, nudging up to $5.9 million, from $5.8 million. 

“Our quarterly results did not meet our expectations and we are disappointed to be reducing our outlook for the year,” CEO Anthony Thompson said on a call with investors Wednesday. “The good news is we're seeing continued sales growth in our retail business with less promotional incentive activity.”

Soft sales in its consumer packaged goods division set the company back during Q2, executives said, noting that the weak performance in that segment had a $1 million impact on company margins. 

A $841,000 loss due to derivatives also had a negative impact on earnings, executives said.

While the company expects to end the fiscal year with continued comp growth and 30 to 32 net new domestic units, it lowered its outlook for net income per share, to the range of 76 cents to 80 cents.

“As we are addressing short-term performance issues in CPG, we are staying focused on driving a retail business model,” Thompson said, “which is the real key to our continued growth and long-term success.”

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