updated 3/10/2004 9:35:19 AM ET 2004-03-10T14:35:19

Krispy Kreme Inc. reported a sharp surge in fourth-quarter profits Wednesday, helped by strong sales at company-owned stores.

For the three months ending Feb. 1, the doughnut maker earned $16.4 million, or 26 cents a share — in line with the consensus estimate of analysts surveyed by Thomson First Call. A year ago, the company earned $5.6 million, or 9 cents a share, including a $5.7 million charge related to an arbitration award against the company. Excluding the charge, the company earned $11.3 million, or about 19 cents a share.

Total fourth-quarter sales increased 36 percent to $185.5 million from $136.7 million at the same time a year ago.

Systemwide sales were driven by an increase in company-store sales of 36 percent to $124.7 million, the company said. At stores open at least a year, company store sales advanced 10.7 percent.

"We are pleased with our record fourth-quarter results," said Scott Livengood, chairman, president and chief executive of the Winston-Salem, N.C.-based company.

"During the quarter, we continued to execute on our core business model while investing in operating initiatives designed for future growth."

For the year ending Feb. 1, net income rose 71 percent to $57.1 million, or 92 cents per share, up from $33.5 million, or 56 cents per share, the previous year. Excluding the arbitration charge, the company said it earned $56.8 million, or 91 cents a share, in its most recent fiscal year.

Total sales surged to $665.6 million, compared with $491.5 million in the prior year.

"We produced record earnings, opened 99 new stores — a record number — and grew systemwide sales 26 percent," said Livengood.

In the fourth quarter, Krispy Kreme opened 35 new stores, including its first store in Mexico, located in Interlomas, a suburb of Mexico City.

Looking ahead, the company said it expects to earn $1.16 to $1.18 per share in fiscal 2005 with sales growth at stores open at least a year in the mid-to-high single digits. Overall sales are expected to increase approximately 25 percent next year, the company said.

Krispy Kreme also expects to open approximately 120 new stores in the coming year.

Founded in 1937, Krispy Kreme operates 394 stores in 44 states, Australia, Canada, Mexico and the United Kingdom.

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