Krispy Kreme plans to restate earnings incurred during its recent fiscal year to correct errors in its financial reporting amid allegations that the company padded sales by doubling shipments to wholesale customers, according to news reports.
The restatements are expected to reduce the company’s income for the 2004 fiscal year between $3.8 million and $4.9 million, or 6.6% to 8.6%, the company said.
Krispy Kreme said its board of directors concluded that statements for the fiscal year, which ended Feb. 1, 2004, need to be “restated” after errors were reported.
The company is under investigation by the Securities and Exchange Commission. In addition, a number of shareholder lawsuits have been consolidated against the company alleging that “the company issues false and misleading statements, including false financial results.”
Krispy Kreme has blamed its financial problems on the low-carb craze.
The Winston-Salem, NC-based company is the leading brand specialty retailer of premium quality doughnuts, featuring its signature hot original glazed doughnuts. Founded in 1937, Krispy Kreme operates 440 stores across the U.S., Australia, Canada, Mexico and the U.K.
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