Krispy Kreme Doughnuts has reported a preliminary revenue slump from approximately US$153m to $116m for the first quarter of its present 2007 financial year.
The losses reflected a decrease in the number of company stores, lower sales to franchisees, and lower royalties and fees from franchisees.
Systemwide sales fell approximately 17% in the first quarter of the 2007 financial year, compared to the first quarter of the prior year, primarily due to a 19% decrease in the number of factory stores to approximately 310.
Krispy Kreme president and CEO Daryl Brewster said: “We are taking steps to turn around the company, we have filed our fiscal 2005 financial statements. We have reached an initial settlement of the ERISA class action. We continue to see growth in our international markets, including two new international development agreements. We are also seeing signs of stability in the US.”
The doughnut brand ceased consolidation of its sole remaining consolidated franchisee, Glazed Investments, in early February 2006 when Glazed filed for bankruptcy protection.
In May 2006, the company sold for cash its notes receivable from Krispy Kreme Australia for approximately $3.8m and entered into a definitive agreement to sell its interest in Krispy Kreme UK for around $5.6m in cash.