Small Hole in Krispy Accounts

Krispy Kreme Announces First Quarter 2007 Revenues of Approximately $116 Million
Krispy Kreme Doughnuts, Inc. has announced that on a preliminary basis it expects to report revenues of approximately $116 million for the first quarter of fiscal 2007, which ended April 30, 2006, compared to revenues of approximately $153 million for the first quarter of fiscal 2006.

The decrease in revenues principally reflects a decrease in the number of Company stores, lower sales to franchisees from the Company’s Manufacturing and Distribution segment, and lower royalties and fees from franchisees.

Systemwide sales fell approximately 17% in the first quarter of fiscal 2007 compared to the first quarter of the prior year primarily due to a 19% decrease in the number of factory stores to approximately 310 (total stores, including satellites, decreased 6%). Average weekly sales per factory store (which is computed by dividing sales from all factory and satellite stores by the number of factory stores in operation) increased approximately 10% and 2% in Company stores and systemwide, respectively, compared to the first quarter of fiscal 2006.

Average weekly sales per store (which is computed by dividing sales from all factory and satellite stores by the aggregate number of all such stores in operation) increased approximately 10% for Company stores and decreased approximately 11% systemwide, compared to the first quarter of fiscal 2006. The average sales per unit data reflect, among other things, store closures and the related shift in off-premises doughnut production into a smaller number of stores.

Systemwide sales data include sales at all Company and franchise locations. Systemwide sales is a non-GAAP financial measure; however, the Company believes systemwide sales information is useful in assessing the overall performance of the Krispy Kreme brand and, ultimately, the performance of the Company.

“We are taking steps to turn around the Company,” said Daryl Brewster, President and Chief Executive Officer. “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 United States.”

There are currently approximately 310 Krispy Kreme factory stores and 85 satellites operating systemwide in 43 U.S. states, Australia, Canada, Mexico, South Korea and the United Kingdom.

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Joel Bissitt :I am an entrepreneur with over 24 years experience and a Director of Franchise UK. Franchise UK, the UK's largest franchise directory. I love working with franchisors & small businesses & promoting & supporting entrepreneurship. I am married with two children and enjoy keeping fit, golf and time with my family.