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Not Everybody Loves Krispy Kreme, it Seems

WINSTON-SALEM, N.C. -- While shop-in-shops are currently in vogue at many major chains, one high-profile partnership has definitely fallen flat. Krispy Kreme Doughnuts Inc. is scrapping its test of bakery units in Wal-Mart stores.

According to press reports, doughnut maker here will close five outlets in Wal-Mart stores around the United States as of Sunday, and the sixth in April.

"It was a test, and we've made a decision right now that the concept is not viable, but we're going to continue our great relationship with Wal-Mart with our wholesale business," spokeswoman Amy Hughes said.

More than 500 Wal-Mart stores carry doughnuts made in Krispy Kreme's own factory-style stores as part of its wholesale business.

Hughes said that the closings were not related to Krispy Kreme's financial situation, and are unrelated to Dunkin' Donut's move, announced in May, to open its own shops within 10 Wal-Mart stores.

Krispy Kreme began rolling out stores with "Hot Doughnuts Now" signs in Wal-Marts in September 2003.

Company executives a year ago said the first test store, in Mount Airy, N.C., was generating about $20,000 a week in sales, on average. That was well below the company's average at the time of around $69,000, but profitable, given the lower startup and operating costs, executives said then.

Krispy Kreme has more than 400 company-owned and franchise stores in the United States, Canada, Mexico, Australia, South Korea and Britain.
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