Doughnuts business rising well

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US doughnut company Krispy Kreme has reported healthy quarterly

US doughnut company Krispy Kreme has reported healthy quarterly results. The group believes that it is now profiting from an ambitious expansion programme. Despite this, shares dipped more than 4 per cent as a consequence of overvalued stock.

Krispy Kreme posted profit for the quarter ended 3 August 2003 of $13 million (€12m), or 21 cents a share, up from $8.9 million, or 15 cents a share, in the year-ago period.

Sales at both company-owned and franchise stores, rose 27.6 per cent to $238.5 million. The group expects sales growth of 25 per cent to 30 per cent for the full year.

The company raised its full-year earnings forecast to 91 cents per share, a penny above its prior outlook and 2 cents above analysts' current forecast of 89 cents. Even so, Krispy Kreme's stock has fallen.

Indeed, some analysts have questioned whether the glazed doughnut manufacturer can maintain its strong rate of growth. There have been suggestions that sales predictions may be at risk if new stores produce lower sales than expected.

Krispy Kreme opened 22 new stores during the quarter. As part of this ambitious strategy of expansion, the firm made its first acquisition overseas with an outlet in Sydney, Australia.

Krispy Kreme now operates over 300 stores, and is looking to expand further. The company plans to open over 70 stores this year alone.

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