Krispy Kreme profit glazed by $14.5M

By Josh Fineman
Bloomberg News Service

Krispy Kreme Doughnuts Inc., known for hot-glazed doughnuts, said third-quarter profit rose 43 percent as sales climbed and the company expanded into Europe.

Net income increased to $14.5 million, or 23 cents a share, in the quarter ended Nov. 2, from $10.1 million, or 17 cents, a year earlier. Sales jumped 31 percent to $169.6 million from $129.1 million, Winston-Salem, N.C.-based Krispy Kreme said in a statement.

Krispy Kreme opened 27 stores in the quarter, including the doughnut maker's first European shop at Harrod's of Knightsbridge department store in London. Chief Executive Scott Livengood has more than doubled the number of outlets to 333 since the company first sold shares to the public in 2000. His goal is to have as many as 1,000 stores in North America within seven years.

"This is clearly a growth story here and I think you are still at the early stage in terms of stores," said Reed Bender, who helps manage $250 million in assets at Robert Bender & Associates, including about 130,000 Krispy Kreme shares. "I think people are really underestimating the amount of stores this company can have."

Dunkin' Donuts Inc., the largest coffee and baked-goods chain in the world, has more than 5,500 stores in 31 countries.

Krispy Kreme expects to earn a profit in Canada and Australia in fiscal 2005, Chief Operating Officer John Tate said in a conference call with analysts and investors.

"After traveling to China recently, I believe that this may be our next big opportunity after Japan and Korea," he said.