Krispy Kreme blames low-carb craze for slump

Saturday, May 8, 2004

The Associated Press

CHARLOTTE, N.C. -- The low-carb diet craze is taking a bite out of Krispy Kreme.

The doughnut company's shares tumbled 23 percent Friday in early trading after it lowered its earnings forecast by 10 percent for the year, in part because of increasing consumer interest in the popular weight-loss approach. Shares closed at $22.51, down $9.29.

The changing dietary habits has hurt makers of bread, cereal and pasta, said Scott Livengood, president and chief executive of the Winston-Salem-based company.

In March, Krispy Kreme unveiled plans to offer a low-sugar doughnut.

One of Krispy Kreme's Hot Original Glazed doughnuts has 200 calories. More than half those calories come from fat, which gives the fried doughnut texture and flavor.

Livengood said the company estimates earnings from continuing operations before charges will be about 23 cents per share in the first fiscal quarter that ended May 2.

Analysts surveyed by Thomson First Call had expected earnings of 27 cents a share.

For the fiscal year ending in February 2005, the company expects to earn $1.04 to $1.06 a share before charges, which is about 10 percent lower than projections. Analysts expected $1.17 a share.

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