Krispy Kreme Doughnuts (NYSE:KKD) Plunges Sharply
The $1.32 billion market capped doughnut major Krispy Kreme Doughnuts (NYSE:KKD) had a forgettable Thanksgiving. This is because the stock of this restaurant chain plummeted by jaw drooping 20.2 percent during trading on December 3. The back ground for the huge drop in the investor confidence in the stock was due to disappointing results that firm reported from its third quarter operations. To put this drop in context readers should note that its closest competitor Dunkin’ Brands (DNKN) saw its market value go down by a negligible 0.3%.
It is quite surprising that the haemorrhaging of the stock happened even though Krispy Kreme Doughnuts (NYSE:KKD) had managed to post solid results. The firm reported a significant 33% increase in its earnings for the quarter to a impressive $0.16 per share. Even more heartening news was the fact that its sales had gone up by an impressive 7% to a $114 million on the back of 3.7% increase in sales from same stores in comparison to previous year.
In spite of the impressive growth demonstrated by Krispy Kreme Doughnuts (NYSE:KKD), the investors were disappointed by the lower than expected projections for the 4Q and next fiscal FY15. It had forecasted its earnings for the current year to come in between $0.6 to $0.63 per share and has raised the next year’s guidance to come in between $0.71 and $0.76 per share. But the damage was caused by the forecast of a low single digit growth in same store sales next year in the U.S markets. It was also expecting same stores sales to drop in its international franchises next year.
Hence the investors discounted the solid 3Q performance and in a knee jerk reaction by selling off the Krispy Kreme Doughnuts (NYSE:KKD) stock. The resturanter also announced the opening of “10-15 company stores, 20-25 domestic franchise stores, and about 85 international franchise stores” in the next fiscal year.