Krispy Kreme Doughnuts Inc. announced on Monday it expects to report estimated revenues of $110-million for the second quarter of the 2007 financial year, dropping from a revenue of $140-million for last year's second quarter.

The popular franchise of doughnuts said the decrease in revenues resulted from a 17 percent drop in number of chain stores available, and lower sales recorded by the company’s Manufacturing and Distribution sector.

Sales fell around 15 percent in the second quarter compared to last years sales. Average sales per store increased by around 7 percent for Company stores and decreased around 8 percent compared to last years fiscal second quarter.

“We continue to make progress in Krispy Kreme's turnaround. In the past quarter we resolved several legal disputes with franchisees. We reduced our guarantees of franchisee obligations from approximately $22 million to approximately $14 million and successfully executed pricing to offset rising input costs.” said Daryl Brewster, Krispy Kreme’s President and Chief Executive Officer.