Krispy Kreme net falls 97%; year-ago had tax gain

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 March 14, 2013, 5:00 p.m. EDT

 http://www.marketwatch.com/story/krispy-kreme-net-falls-97-year-ago-had-tax-gain-2013-03-14?siteid=bigcharts&dist=bigcharts

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By Ben Fox

Krispy Kreme Doughnuts Inc.'s KKD -4.68% fiscal fourth-quarter profit fell 97% from a year ago, when the doughnut chain posted a substantial gain related to income taxes. Revenue and same-store sales showed continued improvement in the results released Thursday.

Shares fell 3% after hours to $14.50, after the company missed adjusted earnings expectations. As of Thursday's close, the stock was up 63% over the past three months.

The company raised its adjusted earnings estimates for the new year, now expecting 53 cents to 57 cents a share, compared with its November view of 49 cents to 55 cents.

Krispy Kreme, which has more than 700 locations selling doughnuts, had struggled with healthier-eating trends in recent years and received a major hit from allegations of management misconduct around 2005. But the company's revenue has improved every quarter for more than two years as the addition of coffee and other beverages helped to boost the number of customer visits. The company late last year signed a deal with Star360 Group to bring its doughnut shops to Singapore, expanding its international presence.

For the quarter ended Feb. 3, Krispy Kreme reported a profit of $4.8 million, or seven cents a share, down from $143.5 million, or $2.01 a share, a year earlier. The year-ago period included a gain of $139.6 million from the reversal of valuation allowances on deferred income tax assets. Excluding that and other items, earnings were up at nine cents from six cents.

Revenue was up 16% to $118.1 million.

Analysts polled by Thomson Reuters had predicted per-share earnings of 12 cents on revenue of $116 million.

Operating margin widened to 7.2% from 5.2%.

Company same-store sales rose 7.5%. Franchise same-store sales were up 9.6% in the U.S., and fell 7.4% internationally. The company said the decline in international same-store sales reflects "honeymoon effects" from the substantial number of international store openings in recent years as well as cannibalization as markets develop.

Revenue at KK Supply Chain, the unit that makes doughnut mixes and doughnut-making equipment that all factory stores are required to purchase, increased 1.8% to $52.9 million.

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