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April 17 (Reuters) - Krispy Kreme Doughnuts Inc KKD.N posted a surprise fourth-quarter profit before charges after the doughnut-shop chain closed stores and rejigged its management in a bid to turn around it business after a string of quarterly losses.
The retailer, which has lost more than two-thirds of its market value over the past year, said it fixed all material weaknesses in its internal control over financial reporting identified as of Jan. 28, 2007.
The company, once a Wall Street favorite, said its net loss widened to $31.8 million, or 50 cents a share, in the fourth quarter ended on Feb. 3 from $24.4 million, or 39 cents a share, a year earlier.
The latest fourth-quarter results include impairment charges and lease termination costs of about 43 cents a share and a charge of $3 million related to payments on behalf of a franchisee.
Excluding charges, the company posted a profit of 3 cents a share, while two analysts on average were expecting a loss of 1 cent a share, according to Reuters Estimates.
Revenue at the company, based in Winston-Salem, North Carolina, fell 1 percent to $110.9 million. Analysts expected total revenue of $105.6 million.
Systemwide sales, which includes sales by both company and franchise stores, rose more than 2 percent, helped by its international franchisees.
Krispy Kreme went public in 2001 with a successful offering, but in recent years struggled with restatements, investigations into its past accounting and a decline in doughnut sales that sent some of its franchisees into bankruptcy.
The company, which competes with privately held Dunkin’ Brands Inc and larger rivals Starbucks Corp (SBUX.O) and Tim Hortons THI.TO THI.N, said late last year it expected franchisees to close a significant number of stores, a move that would hurt royalties and supply chain revenue.
Krispy Kreme, which closed 31 stores in fiscal 2008, warned it might not open a “significant” number of stores in the United States in the near future.
Daryl Brewster stepped down as CEO early this year after the company’s turnaround efforts failed to materialize under his leadership. He was replaced by Chairman James Morgan.
The company’s stock closed at $3.12 Wednesday on the New York Stock Exchange. (Reporting by Dhanya Skariachan in Bangalore; Editing by Pratish Narayanan)