WINSTON-SALEM, N.C.—May 23, 2002—Krispy Kreme Doughnuts, Inc. (NYSE: KKD) today reported that its financial results for the three months ended May 5, 2002, the company’s first quarter of Fiscal 2003, exceed its early EPS expectations.

Net income for the first quarter increased 54.9 percent to $8.9 million compared with $5.7 million in the first quarter of Fiscal 2002. Diluted earnings per share increased to $0.15 in the first quarter compared with $0.10 for the same period in Fiscal 2002.

Systemwide sales, including sales of company and franchise stores, increased 30.4% to $183.1 million in the first quarter, compared with $140.4 million in the first quarter of Fiscal 2002. Sales were driven by an increase in company store sales of 22.2% to $74.2 million and an increase in franchise store sales of 36.7% to $108.9 million. On a comparable store basis, systemwide store sales increased 12.9% and company store sales were up 10.5%.

Total company revenues, which include sales from company stores, franchise operations, and Krispy Kreme Manufacturing and Distribution (“KKM&D”), rose 26.3% to $111.1 million, compared with $87.9 million in the prior year comparable period. Sales from the company stores increased 22.2% to $74.2 million; revenues from franchise operations grew to $4.3 million, up 42.0%; and KKM&D sales increased 34.6% to $32.6 million.

” We achieved strong results across all major sales channels and across our store network,” Scott Livengood, Chairman, President and Chief Executive Officer of Krispy Kreme Doughnuts, Inc. said. “A focused execution of our growth strategy – which is to open stores, establish strong relationships with our customers and communities, and gain greater market penetration through multiple channels of sales – has generated results in excess of our previous projections for the quarter.”

During the quarter, six new Krispy Kreme stores, including three commissaries, were opened and two stores were closed. New stores opened during the first quarter are located in Clearwater, FL, Lafayette, LA and Minneapolis, MN; commissaries that opened are located in Baltimore, MD, St. Louis, MO and Minneapolis, MN. This brings the total number of stores at the end of the first quarter to 222. The factory store, which opened in Maple Grove, MN, just outside of Minneapolis, set a new opening week sales record of $480,693.

The Company indicated that based on its performance in the first quarter, it now expects to earn $0.63 per fully diluted share or $0.01 above consensus for Fiscal Year 2003. Quarterly earnings guidance is as follows: Q2-$0.14; Q3-$0.16; Q4-$0.18. The Company anticipates systemwide comparable store sales of 10% for the year and second quarter expectations of 10%. Additionally, the Company anticipates opening 62 stores in 15 new markets, which is an increase of three stores over previous guidance. Finally, the Company expects to sign at least two franchise agreements for development of international markets in Fiscal 2003.

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