Doughnut maker posts loss

Monday, Nov. 22, 2004 | 9:23 a.m.

Krispy Kreme Doughnuts Inc. posted a third-quarter loss of $3 million, missing analysts' estimates, as costs climbed and same-store sales fell for the first time as a public company. The company's shares declined the most in six months.

The loss at the No. 2 U.S. doughnut maker was 5 cents a share, compared with net income of $14.5 million, or 23 cents, a year earlier. Revenue increased 1.4 percent to $170.1 million in the quarter ended Oct. 31, the Winston-Salem, N.C.- based company in a statement today.

Krispy Kreme had an expense of $5.5 million partly from closing four stores while comparable sales fell 6.4 percent. The company, which is under investigation by the U.S. Securities and Exchange Commission, also pulled its sales forecast.

"The company is out of control and they are not giving guidance," said David Rocker, managing partner at Rocker Partners LLC in Millburn, N.J., who has a short position on an undisclosed number of shares. "You have rising debt, falling equity and particularly falling same-stores sales."