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Krispy Kreme Slumps After Profit Misses Estimates

Krispy Kreme Doughnuts Inc. has been opening smaller factory stores that don’t make doughnuts on the premises and are cheaper to build. Photographer: Andrew Harrer/Bloomberg
Krispy Kreme Doughnuts Inc. has been opening smaller factory stores that don’t make doughnuts on the premises and are cheaper to build. Photographer: Andrew Harrer/Bloomberg

Aug. 30 (Bloomberg) -- Krispy Kreme Doughnuts Inc., the chain that revived itself by expanding beyond sweet treats into coffee and smoothies, fell the most in more than two years after reporting second-quarter profit that trailed analysts’ estimates as costs increased.

The shares tumbled 15 percent to $19.72 at the close in New York for the biggest drop since April 1, 2011. The Winston-Salem, North Carolina-based company has more than doubled this year, while the Standard & Poor’s 500 Index has gained 15 percent.

Net income fell 4.3 percent to $4.72 million, or 7 cents a share, in the three months ended Aug. 4 from a year earlier, Krispy Kreme said in a statement yesterday. Excluding certain items, profit was 14 cents a share. Analysts on average estimated 16 cents, according to data compiled by Bloomberg.

The chain has tried to lure customers from Starbucks Corp. and other coffee sellers by selling fancier drinks such as lattes and caramel mochas. It’s also opening smaller stores that don’t make doughnuts on the premises and are cheaper to build.

General and administrative costs rose 19 percent to $5.66 million in the quarter, the company said. Health-care expenses for employees were also unexpectedly higher, Chief Financial Officer Douglas Muir said on a conference call yesterday.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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