Krispy Kreme Misses Q2 Views, Shares Tumble

Shares of Krispy Kreme Doughnuts KKD dipped more than 15 percent in after-hours trading after the company reported weaker-than-expected results for the second quarter on Wednesday. The Winston-Salem, North Carolina-based company posted quarterly net income of $5.9 million, or $0.09 per share, up from $5.8 million, or $0.08 per share, in the year-ago quarter. Excluding items, adjusted net income surged to $0.15 per share from $0.13 per share. Its revenue climbed 5.7 percent year-over-year to $127.3 million from $120.5 million. However, analysts were expecting earnings of $0.18 per share on revenue of $131.46 million. The average estimate among 14 Estimize users was for earnings of $0.18 per share and revenue of $130.58 million. Systemwide domestic same store sales gained 5.5 percent for the quarter. Company Stores revenue surged 7.1 percent to $84.1 million in the second quarter. Domestic Franchise revenue rose 19.4 percent to $3.9 million, while International Franchise revenue slipped 2.9 percent to $7.3 million. KK Supply Chain revenue increased 6.7 percent to $63.5 million for the quarter. Operating income climbed 11.6 percent to $10.7 million from $9.6 million. President and Chief Executive Officer Tony Thompson said, "We continue to be more strategic in our use of promotional incentives as we balance driving consistent same store sales growth and overall store level profitability. We were pleased with our retail sales performance; however, Company Stores segment profitability was negatively impacted by lower than anticipated results within our consumer packaged goods category. This, combined with some charges associated with our derivative instruments, resulted in us adjusting our financial outlook for fiscal 2016." For fiscal 216, the company projects adjusted net income of $0.76 to $0.80 per share Krispy Kreme shares dipped 15.90 percent to $14.92 in the after-hours trading session.