Krispy Kreme Doughnuts, Inc. (NYSE: KKD) today reported financial results for the three months ended November 3, 2002, the Company's third quarter of fiscal 2003.
Net income for the third quarter increased 56.3% to $10.1 million compared with $6.5 million in third quarter of fiscal 2002. Diluted earnings per share increased to $0.17 in the third quarter compared with $0.11 for the same period in fiscal 2002.
Total company revenues, which include sales from company stores, franchise operations, and Krispy Kreme Manufacturing and Distribution ("KKM&D"), rose 29.4% to $129.1 million, compared with $99.8 million in the prior year comparable period. Sales from the company stores increased 15.1% to $79.0 million; revenues from franchise operations grew to $4.9 million, up 47.0%; and KKM&D sales increased 62.6% to $45.2 million.
Systemwide sales, including sales of company and franchise stores, were $195.3 million in the third quarter, a 26.5% increase compared with $154.4 million in the third quarter of fiscal 2002. Sales were driven by an increase in company store sales of 15.1% to $79.0 million and an increase in franchise store sales of 35.6% to $116.3 million. On a comparable store basis, systemwide store sales increased 10.1% and company store sales were up 13.0%.
Net income for the nine months was $27.8 million, a 53.7% increase compared with $18.1 million in the same period last year. Diluted earnings per share increased to $0.47 in the first nine months of the year from $0.31 per share in the same period a year ago.
Total company revenues increased 28.0% to $354.8 million in the first nine months of the year compared with $277.3 million for the same period in fiscal 2002. Sales from company stores increased to $227.9 million, a 19.4% increase; franchise operations increased 45.9% to $14.0 million; and KKM&D increased 46.9% to $112.9 million.
For the nine months ended November 3, 2002, systemwide sales increased 28.7% to $565.3 million from $439.1 million for the same period in fiscal 2002. This increase was a result of growth in franchise store sales of 35.9% to $337.4 million and a 19.4% increase in company store sales to $227.9 million.
Commenting on the company's third quarter results, Scott Livengood, chairman, president and CEO of Krispy Kreme Doughnuts, Inc. said, "Our fundamentals remain extremely strong, and we have delivered solid results for this extremely active third quarter. During the quarter, we completed a systemwide roll-out of a new line of signature coffee blends, which has already been met with extremely positive customer response."
Further commenting on the company's activity during the third quarter, Livengood added, "While we have significant growth opportunity still ahead of us in large markets, we have also continued to develop Krispy Kreme's small market initiative, which was announced in August. We are currently working on assigning small market territories to our existing group of area developer franchisees. Finally, we recently awarded the development rights for the United Kingdom, where we will open 25 stores over the next 5 years. This marks our second franchise agreement outside North America. A focused execution of our growth strategy has led to another strong quarter that has exceeded our expectations."
During the quarter, 17 new Krispy Kreme stores, including two commissaries, were opened and one commissary was closed. This brings the total number of stores at the end of the third quarter to 249.
The company indicated that based on its performance in the first nine months of fiscal 2003, and its fourth quarter earnings projection of $0.18, the company now expects to earn $0.65 per fully diluted share or $0.01 above consensus for Fiscal Year 2003. The company anticipates systemwide comparable store sales of 10% for the fourth quarter.
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