CHARLOTTE, N.C. — A $9.1 million arbitration judgment in a franchise dispute took a big bite out of Krispy Kreme Doughnuts Inc.'s quarterly earnings, which would have risen by a third if it had not lost the arbitration case, the company said Tuesday.
The Winston-Salem-based chain said net income for the fourth quarter fell to $5.6 million, or 9 cents a share, from $8.3 million, or 14 cents a share, a year earlier.
The quarterly results included a one-time $9.1 million pretax charge related to an arbitration judgment in the company's dispute over ownership rights of one of its franchisees.
Without the charge, earnings rose to $11.3 million, or 19 cents per share, which was an increase of 36 percent over the same quarter last year. That also beat the consensus estimate of analysts surveyed by research firm Thomson First Call by a penny.
Krispy Kreme opened 28 new stores in the fourth quarter, and now has 276 stores at the end of fiscal 2003. The company expects to open 77 new factory stores in the current year, as well as 10 new bakery-cafe or satellite locations.
For the year, net income was $33.5 million, or 56 cents a share, a 27 percent increase over $26.4 million, or 45 cents a share, in fiscal 2002. Sales climbed 25 percent to $491.5 million, up from $394.4 million in fiscal 2002.
The company said it still expects its earnings to be 88 cents per share this year, which is in line with the guidance it gave last month.
The company said weather conditions this year also hurt its business.