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# Krispy Kreme Doughnuts, Inc. Message Board

• di_vur_se_fi di_vur_se_fi Oct 17, 2001 2:01 AM Flag

## Company Store Sales Trends (Part 1)

Summary: The following analysis estimates (conservatively) that same store sales for NEW company stores have fallen 40% or more over the last 2 quarters (8-9 stores in base).

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Quarter, Company Store Sales, Company Store Sales Growth
FY00Q4 43,126 na
FY01Q1 50,956 na
FY01Q2 51,484 na
FY01Q3 54,103 na
FY01Q4 57,134 20.3%
FY02Q1 60,694 13.1%
FY02Q2 61,496 11.9%

(excluding No. Cal.) Company Stores Beginning of Period + Additions - Closings + Transfers = Company Stores End of Period
FY00Q4 59 + 0 - 1 + 0 = 58
FY01Q1 58 + 0 - 1 + 0 = 57
FY01Q2 57 + 1 - 2 + 0 = 56
FY01Q3 56 + 0 - 0 + 0 = 56
FY01Q4 56 + 2 - 0 + 0 = 58
FY01Q3 58 + 0 - 0 + 0 = 58
FY02Q2 58 + 3 - 0 + 3 = 64

No. Cal. Company Stores Beginning of Period + Additions - Closings + Transfers = No. Cal. Company Stores End of Period
FY00Q4 0 + 0 - 0 + 0 = 0
FY01Q1 0 + 1 - 0 + 0 = 1
FY01Q2 1 + 0 - 0 + 0 = 1
FY01Q3 1 + 3 - 0 + 0 = 4
FY01Q4 4 + 1 - 0 + 0 = 5
FY01Q3 5 + 0 - 0 + 0 = 5
FY02Q2 5 + 1 - 0 + 0 = 6

Let's estimate the sales per NEW (opened since FY00Q4) store for the last 3 quarters.

FY01Q4 estimate of sales per NEW store
1) Sales in FY00Q4 = 43,126
2) Sales in FY01Q4 = 57,134
3) Company Store Sales Growth = 20.3%
4) Number of stores used in same store sales calculation = 55 (3 of 58 stores open at FY00Q4 were closed within the next year)
Note: KKD waits 19 months before including a store in same store sales growth = >
a) None of No. Cal. stores are included because all 6 were opened in the preceding 18 months
b) The company stores opened in FY01Q2 (1) and FY01Q4 (2) are not included because they were opened in the preceding 18 months

Assume that the 3 stores which were closed each averaged \$400,000 in sales during any given quarter (the average company sales in FY00Q4, FY01Q1, and FY00Q2 were approximately \$744,000, \$879,000, \$903,000, respectively; I assume the stores were closed because they underperformed)

Therefore, subtract the sales for the 3 stores closed to arrive at the company store sales base:
43,126 - 3 * 400 = 41,926

Given the cumulative company store sales base of 41,926, calculate the same store sales for the 55 stores in FY01Q4 using the Company Stores Sales Growth reported by KKD:
41,926 * ( 1 + 20.3%) = 50,437

Subtract this number from the FY01Q1 sales to get the sales attributable to the NEW company stores (including Northern California):
57,134 - 50,437 = 6,697

By FY01Q4 KKD had opened 3 company owned stores and 5 No. Cal. stores. Assume that the 3 stores opened during the quarter were open for the entire quarter. Calculate the FY01Q4 estimate of sales per NEW store:
6,697 / 8 = 837

(continued)

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• I originally wrote:

Summary: The following analysis estimates (conservatively) that same store sales for NEW company stores have fallen 40% or more over the last 2 quarters (8-9 stores in base).

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"40% or more" should be replaced with "35%", i.e.

Summary: The following analysis estimates (conservatively) that same store sales for NEW company stores have fallen 35% over the last 2 quarters (8-9 stores in base).

• (continued from Part 1)

FY02Q1 estimate of sales per NEW store
1) Sales in FY01Q1 = 50,956
2) Sales in FY02Q1 = 60,694
3) Company Store Sales Growth = 13.1%
4) Number of stores used in same store sales calculation = 55 (2 of 58 stores opened at FY01Q1 were closed within the next year and 1 had just been opened)

To arrive at the company store sales base:
1) Subtract the sales for the 2 stores closed
2) Subtract the sales for the 1 store just opened (assume the store was open during the entire quarter and had sales of \$750,000)
50,956 - 2 * 400 - 1 * 750 = 49,606

Given the cumulative company store sales base of 49,606, calculate the same store sales for the 55 stores in FY02Q1 using the Company Stores Sales Growth reported by KKD:
49,606 * ( 1 + 13.1%) = 56,104

Subtract this number from the FY02Q1 sales to get the sales attributable to the NEW company stores (including Northern California):
60,694 - 56,104 = 4,590

By FY02Q1 KKD had opened 3 company owned stores and 5 No. Cal. stores. Calculate the FY02Q1 estimate of sales per NEW store:
4,590 / 8 = 574

FY02Q2 estimate of sales per NEW store
1) Sales in FY01Q2 = 51,484
2) Sales in FY02Q1 = 61,496
3) Company Store Sales Growth = 11.9%
4) Number of stores used in same store sales calculation = 55 (2 of 57 stores open at FY01Q1 were opened within the previous 18 months)

To arrive at the company store sales base:
1) Subtract the sales for the 2 stores recently opened (assume both stores were open during the entire quarter and had sales of \$750,000)
51,484 - 0 * 400 - 2 * 750 = 49,984

Given the cumulative company store sales base of 49,984, calculate the same store sales for the 55 stores in FY02Q2 using the Company Stores Sales Growth reported by KKD:
49,984 * ( 1 + 11.9%) = 55,932

Subtract this number from the FY02Q1 sales to get the sales attributable to the NEW company stores (including Northern California):
61,496 - 55,932 = 5,564

By FY02Q2 KKD had opened 9 company owned stores and 6 No. Cal. stores. The 6th No. Cal store was opened on May 15, so it was open for 5/6 of the quarter. Assume that the 3 transferred stores from the reaquisition of Savannah and Charleston were NOT included in the company store figure. Also, assume that the 3 stores opened during the quarter were opened at the middle of the quarter, so they counted as 3 * 0.5 = 1.5 stores. Calculate the FY02Q2 estimate of sales per NEW store:
5,564 / (8 + 5/6 + 1.5) = 538

Thus, I estimate the following:

Period, Estimate of NEW Company Store Average Sales
FY01Q4 837
FY02Q1 574
FY02Q2 538

In other words, sales have fallen off by over 35% in these stores from FY01Q4 to FY02Q2.

Note: This calculation assumes that I understand the KKD same store sales calculation; if, however, I do not, I challenge the board to provide an alternative calculation.

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