Canaccord Genuity Morning Coffee on Krispy Kreme Doughnuts (KKD): Glazed and Confused

March 22, 2012 10:20 AM EDT
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Canaccord Genuity Morning Coffee on Krispy Kreme Doughnuts (NYSE: KKD): Glazed and confused.

Krispy Kreme Doughnuts’ Q4 earnings were in line with estimate; however, shares traded lower after management cut its F13 guidance to reflect the absence of a tax credit. Q4 earnings came in at $0.06 per share, matching consensus while revenue increased by 11% to $102 million, ahead of the $101.3 million analysts were looking for. Company same-store sales increased by 8.3% while franchise same-store sales increased by 7.9% in the U.S. and fell 9.5% internationally. Looking ahead, management cut its earnings forecast due to the absence of a tax credit, seeing EPS in a range of $0.21-0.24 versus its prior guidance of $0.35-0.41. Currently, the average analyst estimate is $0.35. The company is looking to drive sales growth by increasing customer visits and the number of products sold at each visit, adding coffee and other beverages to its menu and by expanding domestically and abroad. On the international front, one analyst believes that expansion in Latin America, Asia and Europe will ramp this year while domestically, they believe there is still room to grow given its relatively small size. Currently, it operates 230 stores in the U.S. versus 7,000 operated by Dunkin’ Donuts (Nasdaq: DNKN). Management said that in F13 it plans to open 5-10 company stores, 10-15 domestic franchise stores and roughly 75 international franchise stores.

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