Investing.com -- Shares in Krispy Kreme Doughnuts Inc (NYSE:KKD) tumbled more than 17% in after-hours trading after one of the world's largest doughnut companies downgraded its guidance for the rest of 2015, amid softness within its packaged goods category and changes related to its derivative instruments.
For the three-month period that ended on August 2, Krispy Kreme earned revenues of $127.3 million, a spike of 5.7% on a year-over-year basis. The doughnut chain also saw its operating income rise to $10.7 million, an 11.6% increase from $9.6 million in the same quarter last year. For Krispy Kreme's first half of Fiscal Year 2016, it received $35.4 million in cash provided by operating activities, significantly higher compared with the $27.7 million it received during the first six months of 2014.
Still, disappointing sales among international franchises that have been open for at least 18 months tamped down on its earnings over the period. During its second quarter, Krispy Kreme saw its international revenues at those stores decline 2.7%, excluding negative currency impacts. As a result, the chain posted per share earnings of 0.15 excluding certain items, below analysts' forecasts of 0.19 for the quarter. Krispy Kreme's packaged goods division also experienced minor revenue gains over the 13-week period, increasing by only $45,000 to $39.76 million.
“Systemwide domestic same store sales were strong, increasing 5.5% and both Company Stores same store sales and traffic were positive for the quarter. We continue to be more strategic in our use of promotional incentives as we balance driving consistent same store sales growth and overall store level profitability," Krispy Kreme CEO Tony Thompson said in a statement. "We were pleased with our retail sales performance; however, Company Stores segment profitability was negatively impacted by lower than anticipated results within our consumer packaged goods category. This, combined with some charges associated with our derivative instruments, resulted in us adjusting our financial outlook for fiscal 2016.”
For the fiscal year that will end in January, Krispy Kreme lowered its full-year guidance from 0.80 to 0.85 per share to 0.76 to 0.80. Krispy Kreme remains committed to expanding its brand outside the United States. At the end of the second quarter, the company had 758 international franchises in operation, up from 621 at the conclusion of the second quarter of 2014. Overall, Krispy Kreme had 1,045 franchises in operation at the end of the three-month period, an increase of more than 15% on a yearly basis.
“We remain focused and very confident in the long-term opportunities for the brand. As part of our ongoing efforts to enhance shareholder value, we are returning a significant portion of our excess cash flow to our shareholders via our ongoing share repurchase program, which our Board increased by $50 million during the quarter," Thompson added.
Shares in Krispy Kreme fell 3.04 or 17.14% to 14.70 in after-hours trading.