US doughnut maker and retailer Krispy Kreme has reported a first-quarter net loss as its operations were hit by the popularity of low-carbohydrate diets.

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The company posted a net loss of US$24.4m, or 38 cents per share, for the first quarter to 2 May, compared to net income of $13.1m, or 22 cents per share, in the year ago period. Results in the latest quarter were impacted by charges related to the closure of its Montana Mills business and restructuring.


Income from continuing operations for the first quarter of fiscal 2005 decreased to $9.8m, compared with $13.1m in the first quarter last year.


Total revenues for the quarter, which includes sales from company stores, franchise operations and Krispy Kreme Manufacturing and Distribution (KKM&D), increased 24.0% to $184.4m. On a comparable store basis, systemwide sales increased 4.0% and company store sales advanced 5.2%.


Krispy Kreme issued a profit warning earlier this month due to the increased popularity of low-carbohydrate diets, and said it planned to close or sell off its Montana Mills operations.

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“For several months, there has been increasing consumer interest in low-carbohydrate diets, which has adversely impacted several flour-based food categories, including bread, cereal and pasta,” said CEO Scott Livengood.


Krispy Kreme said it estimates fiscal 2005 earnings per diluted share from continuing operations of between $1.04 and $1.06.


The company, which is now focusing on its Krispy Kreme brand, has also scaled back its expansion plans to 100 new stores in fiscal 2005, 17% less than had been previously planned.