Krispy Kreme is blaming the Atkins diet for low sales
 

Krispy Kreme: Diets hurt doughnuts

Chain operator says low-carb craze eats into demand, sees 2005 profit 10% below forecasts.
May 7, 2004: 3:20 PM EDT
By Andrew Stein, CNN/Money staff hahahahahar


NEW YORK (CNN/Money) - Is the Atkins diet craze driving a wedge between doughnuts and dieters?

Shares of Krispy Kreme Doughnuts Inc. (KKD: down $8.19 to $23.61, Research, Estimates) tumbled 18 percent Friday after the doughnut chain operator warned that its first-quarter and full-year profits will come in below Wall Street's estimates, saying low-carbohydrate diets such as Atkins hurts demand for doughnuts.

"This [low-carb] phenomenon has affected us most heavily in our off-premises sales channels, in particular sales of packaged doughnuts to grocery store customers," CEO Scott Livengood said in a statement.

However, on a conference call Friday morning, some analysts were skeptical about how much the low-carb craze was to blame for the shortcoming.

When an analyst asked why the Atkins and South Beach inspired diets should affect demand now, when doughnuts have never been a part of any diet, the company said "our intention is to give you the facts as we know them...this is not an unraveling...the jury is out. This could be a new way of eating, even though it is not supported by nutritionists."

Krispy Kreme executives added they are comfortable with its reduced estimates based on current consumption "assuming trends will continue and will not worsen. A change in either direction would alter future guidance."

Following the company's release, Standard & Poor's equity analyst downgraded the stock to "hold" from "accumulate" and dropped the price target on the stock to $33 a share from $43, citing the increased risk with the stock.

But that may not be the end of analysts actions on the company. Morningstar's analyst Carl Sibilski said he placed the stock under review after the company's release.

"The Atkins thing surprised me," he said. "That's something I expected to hear last year. The Atkins diet won't be their downfall, it will be their strategy of trying to sell doughnuts wholesale."

Rise of doughnuts
Shares of Krispy Kreme soared after going public in early 2000, but they have dropped 13 percent this year as investors have become more skeptical about the company's long-term growth prospects.

Short interest in the stock in the stock has risen to 13.7 million shares, or about 24 percent of the outstanding shares, from 13 million the previous month.

In a short sale, investors borrow stock from a broker, promising to return it at a later date and pocketing the difference.

For the just-ended fiscal first quarter, the Winston-Salem, N.C.-based company said it now estimates earnings from continuing operations, excluding asset impairment charges, of about 23 cents per share.

Analysts, on average, had been looking for 27 cents on that basis, according to First Call.

For 2005, the company now expects to earn between $1.04 and $1.06 a share. Wall Street had expected a profit of $1.17, according to First Call.

"Needless to say, we are disappointed that external forces have caused us to revise our first quarter and fiscal 2005 earnings guidance," Livengood added.

In addition, Krispy Kreme said it will dispose of its Montana Mills bread unit, close six factory stores and shut three underperforming coffee-and-doughnut shops.

The company said it will take charges of up to $48 million in the first quarter and restate prior and past financial results to reflect Montana Mills as a discontinued operation.

I think people are starting to figure it out.


It's just a fucking doughnut.

GOOD!

although a little excersize would be 10 times better for them than the atkins diet....

they are barking up the wrong tree

its "society"(<----the problem) thats going atkins crazy!!!!!

or could it be that KK is waaay over hyped and people are realizing that they're just doughnuts not the 2nd coming of Christ?

My bet is they come out with a lower carb donught. Also, the people on the Atkins diet like most diets are on it hard core for a few months they jump off for a few months, then back on it.

People will always come back to Krispy Kreme donughts.

It's just a bunch of cry baby's playin' the blame game.

It's easy these days...if you don't like how things are goin' for you, blame someone else & then sue them. It's the American way!

krispy kreme donuts are disgusting anyways... they're all airy and nasty

Krispy Kreme is still way overvalued. It was bound to happen despite the carb-conscious culture. I agree that there's little substance to their regular glazed donuts.

Yeah, a product mainly consisting of sugar and flour is easy to transform to low-carb.

its an orgasm for the taste buds!

rofl

its like trying to make bottled water, without the water

They taste good though...think people are just learning more about carbs and how they're bad for you.

Their fucking doughnuts leave a greasy film in my mouth.

Nasty, though a hot one did taste better then cold.

Gotta blame somebody, and who better then a dead man to peg it on.

If they arent warm there junk... but if their warm, Ill eat the whole box

so there is a 10% decrease in sales all because of one year of Atkins diet program

They should blame the wendy's and mcd's salads more than atkins... ppl are more aware nowadays.

That's why they're blaming Atkins, because people are more aware about carbs...

Good point! :winkwink:

That sucks for krispy kreme but not for subway. They should come out with low carb donuts :winkwink:

Call me crazy, but I think those donuts are sick!

I have to say I love krispy kremes. It's the only etablishment open at 4am :rasta Also we get all these yummy flavors


hahahahahahas 'n creme
ny cheeseckae
strawberry shortcake
pumpkin pie
banana creme

aaaaaah, be back in 5 :321GFY

I just love donuts!

Who doesn't? :winkwink:

satan

They need to figure out a way to make a low carb donut, and charge like 5 dollars each for em.

Problem solved.

im sure that'd taste good

Have you seen all the low carb breads out? What about low-carb pizzas? Companies are changing everything they make now because of this diet.

Their doughnuts suck period.

:Graucho

Lol.
I red somewhere that cocacola was coming out with a low-carb coke with only like 40 carbs.. that's a lot of carbs. Diet coke (in finland) has 0 carbs. It's all about marketing. I bet my hairy ass the low carb pizzas and breads aren't as low carb as the image gives out.

i think its called C2

:1orglaugh no shit.

I can't imagine the kind of costs involved with these huge fucking mega stores they have.

It's about taste too
The have been trying to find a lower calorie pseudo-diet drink for a while.

not true,
if that was the concern,
they would never have switched from sugar to high fructose corn syrup back in the day-
a huge difference in taste

i'm surprised YOU said this
:1orglaugh :1orglaugh :1orglaugh

fuck em, im going to pick up a box today :thumbsup

I always wondered what the fuck Krispy Kreme products were. I read you talking about Krispy Kreme for months and months. I wanted to buy one of each product just to see them. Shit, I'm on the internet! Typed in www.krispykreme.com and all I can find there are fucking donuts! DONUTS! I thought it was some other kind of stuff (made with flour as sugar too). Damn it!

I like dunkin'donuts, but what's so special about Krispy Kreme?

For the first time I typed in www.wendys.com too.

I'm surprised they haven't already. Here they are whining about low sales instead of doing something about it.

I'm personally extremely sick of all this atkins, south-beath low-carb BS .. but you can be your ass if I owned a restaurant I would be promoting low-carb like there was no tommorow.

B-I-N-G-O!

PS. Krispy Kreme has already announced that they have plans to release a "lo-carb" line of donuts.

I am a Dunkin man myself , KK taste good right out of the oven. I dont see them tasting as good sitting on a store shelf.

I also believe they were just overhyped and are coming back to earth. Even though the whole low-carb fad is extremely annoying and the type of stupid thing that could only come from america, I dont think it deters people from eating doughnuts.

If that were the case, I think there would be more said from guys like Dominos, PapaJohns, about low sales.

I used to get a box at the grocery store, and just got sick of them.

Exactly. McDonalds has been promotting their salads and healthy choices menu, they even allow you to get their burgers with no buns for the low carb people