Winston-Salem, North Carolina-based
Krispy Kreme Doughnuts, Inc.
(
KKD
) recently announced that its President and Chief Operating Officer
(
COO
) Kenneth A. May has stepped down from his position citing personal
reasons.
Mr. May joined the company toward the end of November 2011 and
we were encouraged with his appointment given his experience of
more than 25 years in the field of retail, brand enhancement and
supply chain. We expected Krispy to prosper under his
leadership.
However, his resignation in such a short span of time comes as a
shock for us. The investors were also disappointed; and
consequently, the stock price fell 18 cents from the previous day
price and closed at $6.84 on Tuesday.
James H. Morgan, the Chairman and Chief Executive officer (
CEO
) of Krispy Kreme has been reinstalled as the company's President,
the post he had held since 2008 and had to vacate when May
joined.
In the recently concluded fourth quarter of 2012, the company
reported adjusted earnings of 6 cents per share, lagging the Zacks
Consensus Estimate by a penny. Quarterly earnings came in the
positive territory from the year-ago loss of 2 cents per share.
Total revenue climbed 11.2% year over year to $102.0 million in
the quarter. Same-store sales at company stores rose 8.3%,
reflecting the thirteenth consecutive quarter of comps growth.
Domestic franchise same-store sales grew 7.9%, but International
franchise same-store sales fell 8.8%.
For 2013, the company expects earnings to remain between 21
cents and 24 cents per share. On an adjusted basis,
management expects earnings in the range of 35-41 cents, which
includes only income tax. Operating income is estimated to be in
the range of $29 million to $33 million, inclusive of
impairment and lease termination costs.
Krispy Kreme, which competes with the likes of
Red Robin Gourmet Burgers Inc.
(
RRGB
) and
Papa John's International Inc.
(
PZZA
), currently retains a Zacks #4 Rank that translates into a
short-term Sell rating. We are also maintaining our long-term
Neutral recommendation on the stock.
KRISPY KREME (
KKD
): Free Stock Analysis Report
PAPA JOHNS INTL (
PZZA
): Free Stock Analysis Report
RED ROBIN GOURM (
RRGB
): Free Stock Analysis Report
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