"Consumer basics" seems to be an outdated term these days, with folks changing their opinion of which retail and consumer products are necessary. Americans have cut their spending across the board, with restaurants and retailers among those fighting for survival amid sales declines. Let's see who's losing money and tackling debt in this month's installment of "Who's Broke Now?"

Is the light on at Krispy Kreme?
I don't know about you, but I find the smell of freshly baked donuts appetizing no matter what time of day it is. However, making tasty treats doesn't necessarily lead to making lots of money. Krispy Kreme Doughnuts (NYSE:KKD) is no stranger to financial follies, and it's certainly broken the heart of more than one investor. (And let's not even talk about its contribution to growing obesity rates and higher health-care costs.)

Today, Krispy Kreme is still losing money, but it did deliver almost break-even results for the last quarter. The good news for investors was a 5.9% increase in year-over-year same-store sales for company-owned locations, which beat even McDonald's (NYSE:MCD) August same-store sales of 2.2%

And Krispy Kreme is facing pressure from high-performing rivals. Recently, competitor Tim Hortons (NYSE:THI) linked up with Cold Stone Creamery to serve a wide range of concoctions in co-branded locations throughout the United States and Canada. Krispy Kreme, trying to fight off the invasion of the Canadian donut giant, has countered with its own launch of donut shops with soft-serve ice cream.

Yes, Krispy Kreme did generate positive free cash flow in three of the last four quarters (but not in the last quarter), while cutting long-term debt. But its cash position also dropped by almost 45% in the previous 6 months, to $19.6 million. With combined current and long-term debt/obligations of $113.5 million, the company doesn't have much cushion if consumers do decide to cut back on tasty treats.

As Starbucks (NASDAQ:SBUX) has found out the hard way, consumers don't always drown their sorrows in sugary sweets when times are tough. Sure, Krispy Kreme's net margins have improved to just -1.2% over the last year -- a far sight better than the -15.6% that the company reported for fiscal 2007. Maybe the worst of the recession is over, but if it isn't, Krispy Kreme investors could find themselves with a box full of stale donuts.

Is Pier 1 at the dock's edge?
Well, you know it's bad when a company starts its earnings' "highlights" by touting an improvement in (but not elimination of) operating losses and a 7.6% drop in comparable-store sales. That was the case when Pier 1 Imports (NYSE:PIR) announced second quarter earnings last week.

The executive team almost made it worse by talking about "mixed metaphors" and "green shoots" in its earnings synopsis. Rhetoric is fine and progress is good, but it's hard not to improve on last year's $30.2 million quarterly loss. Pier 1 cut the loss to $15.8 million, but cash is also dwindling, decreasing from $191 million last August to $108 million this August. With liabilities of $438 million and inventory of $336 million, Pier 1's financial picture isn't very attractive.

Home-furnishing companies have struggled at all ends of the market spectrum. Monthly sales for the furniture and home sector have declined by almost 13% year-over-year with no indication of improvement. Higher-end competitor Williams-Sonoma (NYSE:WSM) must also now battle consumers' non-luxurious tastes, as folks are more apt to head to Target (NYSE:TGT) stores for name-brand products at better prices.

Pier 1 has a history of underperforming, with sales declining at an average rate of 8.1% annually over the past 5 years. If you had invested in Pier 1 at that time, your average return over the five-year period would be a loss of 26%. The stock price hit a low of $0.10 this year on bankruptcy fears, and its current price of $3.78 seems way too high, considering the amount of risk the company is carrying.

Now what?
Both Pier 1 and Krispy Kreme have improved over their previous results, but when you're losing money, let's hope that you're showing some glimmer of hope. Loads of debt does increase risk for any company, and it can especially hurt retailers and restaurants subject to constantly changing consumer tastes. As Americans look to cut their own debt exposure, Pier 1 and Krispy Kreme are among the retail companies with not-so-tempting investment prospects.

So, Fools, which bound-for-the-bin companies should I examine next month?

For related Foolishness:

Tim Hortons is a Motley Fool Global Gains pick and Starbucks is a Stock Advisor and Inside Value recommendation. The Fool also owns shares of Starbucks. Hungry for more investing advice? Give the Motley Fool’s newsletters a try via the 30-day free trial.

Fool contributor Colleen Paulson owns stock in Tim Hortons but no other company mentioned in this article. The Fool’s disclosure policy is always fresh and tasty.