Krispy Kreme in new sticky mess

Fatty fast foods have come under fire from diet gurus

Shares in Krispy Kreme Doughnuts have plummeted by almost 20% after the firm announced a quarterly loss of $3m due to store closures and poor sales.

The firm posted losses of $3m for the third quarter ending 31 October compared with profits of $14.5m a year earlier.

The company also withdrew its prediction that sales would rise 15% for the year ending in January.

Krispy Kreme has recently been hit by the craze for low-carb diets.

Diet factor

It is also being investigated by the Securities and Exchange Commission (SEC) into how it accounted for the repurchase of franchises and lowered profit forecasts.

There is a group of consumers who have altered their purchasing habits because of dietary concerns Scott Livengood, Krispy Kreme

"We only see negatives in the Krispy Kreme earnings release this morning," J.P. Morgan analyst John Ivankoe told the Reuters news agency.

Some observers say the store has expanded too quickly and that its doughnuts lost some of their appeal once they were sold in places like supermarkets and convenience stores.

"There is a group of consumers who have altered their purchasing habits because of dietary concerns," Krispy Kreme chief executive Scott Livengood said on Monday.

Krispy Kreme, which went public in 2000, has lost more than 80% of its market value since August 2003.