It sounds like an unlikely pairing, but Krispy Kreme (NYSE:KKD) -- maker of glazed doughnuts that are hard to eat without getting some glaze on your shirt (and certainly on your fingers) -- opened its first location in the United Kingdom this morning at the famous Harrods department store.
This is only the chain's second location outside North America, but it plans to open 25 more stores in England and Ireland in the next five years. Apparently, the North Carolina chain assumes its sugary doughnuts and fresh coffee can compete with classic crumpets and tea.
The company's famous "Hot Doughnuts Now" sign will light up to be visible from the store's London street entrance and from its second entrance, Harrods Food Hall, starting at 7 every morning. This is the first time the sign will shine in Europe. Homer Simpson would be proud.
Krispy Kreme operates nearly 320 stores in the United States, making more than 7 million doughnuts daily. A typical store sees $35,000 a week in sales, but apparently the product is addicting because much older stores in the Southeast have sales reaching $80,000 a week. Breakeven for a store is around $20,000 to $25,000 in weekly revenue.
New stores typically open to $60,000 to $70,000 a week in sales, before settling below that and then -- with luck -- building over the years. The chain has achieved strong sales growth at stores open at least a year, recently double-digits year over year.
A Wall Street Journal article raised concerns about sales results a few weeks ago, and this week the company spoke to those concerns, saying sales fluctuations are to be expected and are part of its model.
Aside from England and Ireland, Krispy Kreme plans to open about 75 other international locations in the next five years, while opening about that many stores next year in North America. Australia was the first international site, now the U.K, and later markets will likely include Mexico, Korea, Japan, and possibly China. The company should near $1 billion in sales this year and grow earnings around 45%.
