Krispy Kreme Profit Rises, But Stock Down On Outlook Cut

(RTTNews) - Krispy Kreme Doughnuts Inc. (KKD) on Monday reported an increase in profit for the first quarter, driven largely by revenue growth, with earnings in line with Wall Street estimates. Nevertheless, revenue fell short of expectations hurt by harsh winter.

Moving ahead, the company lowered its earnings outlook for the full year 2015, based on first-quarter results and higher costs related to CEO transition. Following the news, Krispy Kreme shares plunged 10 percent in after-hours trade.

For the fiscal year 2015, the company now project adjusted earnings of $0.69 to $0.74 per share, down from its previous guidance of $0.73 to $0.79 per share. Analysts polled by Thomson Reuters currently expect earnings of $0.78 per share for 2015. Analysts' estimates typically exclude one-time items.

Executive Chairman James Morgan said the earnings outlook was revised based on the first-quarter performance, higher than anticipated investment in a new enterprise resource planning system and higher than planned costs related with executive management succession.

The company has appointed Anthony Thompson as President and Chief Executive Officer, effective June 1, replacing James Morgan.

The doughnut chain's revenue for the quarter increased 0.8 percent to $121.6 million from $120.6 million last year. Four analysts had a consensus revenue estimate of $126.68 million for the quarter.

"We note, however, that severe winter weather adversely affected both on-premises and wholesale sales throughout our Company store base in the Southeast, and contributed to a 1.5 percent decline in same store sales at Company shops against a very tough 12.2 percent same store sales gain in the first quarter last year. Our domestic franchisees, however, who were less affected by weather, posted a gain in same store sales of 4.5 percent on top of an 11.8 percent rise in the first quarter last year," said Morgan.

Winston-Salem, North Carolina-based Krispy Kreme's first-quarter profit rose to $9.7 million or $0.14 per share from $8.0 million or $0.11 per share last year.

Adjusted earnings for the quarter rose to $0.23 per share from $0.20 per share last year. On average, five analysts expected earnings of $0.23 per share for the quarter.

KKD closed Monday's trading at $19.00, up $0.16 or 0.85%, on the NYSE. The stock, however, dropped $1.85 or 9.74% in after-hours trade.