US doughnut maker and retailer Krispy Kreme has reported a sharp fall in quarterly profit as its operations were hit by the continuing popularity of low-carbohydrate diets in the US.

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The company posted net income of US$5.8m, or 9 cents per share, for the second quarter to 1 August, compared to $13.0m, or 21 cents per share, in the same period of the previous year.


Second-quarter systemwide sales, including sales from company and franchise stores, increased 14.8% compared with the second quarter last year. Total revenues for the quarter, which include sales from company stores, franchise operations and Krispy Kreme Manufacturing and Distribution (KKM&D), increased 11.5% to $177.4m. On a comparable store basis, systemwide sales increased 0.1% and company store sales increased 0.6%.


“Although we are disappointed with the second quarter financial results, we are optimistic about the long-term growth potential of the business,” said chairman, president and CEO Scott Livengood.


“We are focusing our efforts and resources on initiatives that improve long-term business prospects,” Livengood said, adding that he is confident in the company’s ability to restore its business momentum.

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Krispy Kreme now estimates that systemwide sales will grow approximately 15% for fiscal 2005 and approximately 10% in the second half of the year. The company has revised its fiscal 2005 development plans and currently estimates opening approximately 75 new stores systemwide, including approximately 60 factory and 15 satellite stores.


“The company is focused on delivering improved results over the long term and, therefore, is not providing earnings guidance for the third quarter or fiscal 2005,” Krispy Kreme said.