Krispy Kreme posts first profitable year since 2004
Friday, April 1, 2011
(Updated 5:22 am)
By Winston-Salem Journal
WINSTON-SALEM (MCT) — A slight loss in the fourth quarter didn't prevent Krispy Kreme Doughnuts Inc. from posting its first profitable year since 2004.
The company reported Thursday that net income totaled $7.6 million for fiscal 2011, which ended Jan. 30. By comparison, it had a loss of $200,000 in fiscal 2010.
However, profitability in fiscal 2012 may come down to whether consumers are willing to pay more for a doughnut, whether bought hot and fresh in a shop or in a grocery or convenience store.
Commodity costs, both for food preparation and fuel, are projected to be about $14 million more this year than last year.
The company expects that higher prices will offset at least $12 million of the additional expenses. Prices went up in early March in its shops. They will go into effect by the end of April in groceries and convenience stores.
Krispy Kreme also expects to shave costs through other initiatives that include changes in its labor scheduling. On March 23, the company said the decision to outsource the remainder of its domestic supply-chain distribution will cost 25 local workers their jobs over the next two months.
Jim Morgan, the top executive at Krispy Kreme, credited higher operating income of $19.2 million and the first year-over-year growth in revenue since fiscal 2005 for the profitable year.