WSJ -- "Atkins" idiots are ruining things for KKD :
May 7, 2004 7:57 a.m.
Krispy Kreme Warns Profit For Year Will Miss Target
DOW JONES NEWSWIRES
WINSTON-SALEM, N.C. -- Krispy Kreme Doughnuts Inc. Friday warned that its operating earnings in the current fiscal year will be 10% lower than its previous estimate.
The doughnut maker said the increasing consumer interest in low-carbohydrate diets hurts its off-premises sales, mostly packaged doughnuts to grocery stores.
Krispy Kreme said the low-carb diet trend had little discernable effect on its business last year. But the trend has heightened significantly since the beginning of the year and accelerated in the last two to three months, the company said, citing recent market data.
Krispy Kreme plans to divest its Montana Mills operations, closing most of the stores, while pursuing a sale of the remaining stores. As a result, the company will record a first-quarter pretax asset-impairment charge of $35 million to $40 million, and expects pretax charges of $2 million to $4 million in subsequent quarters related to potential lease and severance obligations.
Krispy Kreme said it also plans eliminate certain stores, including about six underperforming factory stores and three doughnut-and-coffee shops located in strip centers, which are unable to benefit from drive-thru business.
The company will record additional first-quarter asset-impairment charges of $7 million to $8 million, or about seven cents a share, partly related to ancillary facilities that will remain in operation. These actions will result in pretax charges of up to $5 million, or four cents a share, in subsequent quarters related to potential lease and severance obligations, the company said.
It said it now expects its income from continuing operations, excluding charges, to be 10% lower than previous guidance.
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