It won’t file results on time, and frustrated franchisees fear the doughnut maker may give up making the glazed treats on-site.
Will the dark clouds hanging over Krispy Kreme Doughnuts ever lift? The Winston-Salem (N.C.)-based doughnut chain disclosed on Sept. 12 that it won’t be able to file its second-quarter results on time, the latest in a long series of setbacks as it tries to recover from plunging sales and an accounting scandal.The company, which is under Securities and Exchange Commission investigation for accounting irregularities, said it can’t report results for the quarter ended July 30 because of “material weaknesses” in its bookkeeping. Krispy Kreme (KKD) said that when it finally does report, it expects that revenues for the quarter will have fallen to $110 million, down sharply from the $140 million booked in the same quarter of 2005, when the chain operated 370 factory stores, or 75 more than today.
Surprisingly, Krispy Kreme’s stock didn’t tumble on the latest news. Shares of the former Wall Street darling dipped just 4 cents on Sept. 12, closing at $8.05. Some investors were heartened by the company’s disclosure that average weekly sales rose 8% in company-owned stores and 5% systemwide— a sign that management may have at least stanched the bleeding after closing dozens of underperforming stores over the past year.
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