Slide 1HistoryStore LocationsTwo Locations in OregonStore Layout/DesignAdvertisement / MarketingDistinguishing AspectsRecent ActivityDownward Spiral. . . and it gets worse . . .Slide 12Slide 13What next?Slide 15SourcesJosh Hayden Jason CraigRonnie JackoHistory1937 – Founded by Vernon Rudolph, KK opens first store in North Carolina.1940s-1950s - Build own mixing plant and distribution system.1960s-1970s - Krispy Kreme begins to expand their stores.1990s - Continue expansion that include stores in New York and California.Krispy Kreme ProfileFounded In 1937Headquartered in Winston-Salem, North CarolinaProducts – Doughnuts (30 kinds), soft drinks (espresso, chillers), hot drinks (coffee)Revenue – 510.21 million USD (2006)Net Income - 88.45 million USD (2006)Employees – 4,250Store LocationsKrispy Kreme have stores located all over the USStores have not been limited to only the US (Canada, United Kingdom, Mexico, and Australia)Krispy Kreme can be found in grocery stores (Wal-Mart & Target), convenience stores, and gas stationsTwo Locations in OregonBeaverton16415 NW Cornell RoadBeaverton, OR 97006 US Clackamas9950 S.E. 82nd AvenuePortland, OR 97266 USStore Layout/DesignFreestanding: Most free-standing Krispy Kreme stores are constructed with a long window between the customer area and the kitchen, allowing customers to watch the operation of the doughnut-making machines. Smaller Stores: Most of the smaller stores get their donuts from other locations rather than producing them on-site.Atmosphere: Very welcoming, with bright lighting. Seating is limited but available. Factory tends to pull curious customers inside.Advertisement / MarketingFree doughnut strategy – “Hot Now”; free doughnut while waiting in line.TV ad campaignGifts/Accessories – shirts, sweatshirts, hats, boxers, coffee, mugs, toys.Fundraising – helped schools raise over $30 million last year (selling doughnuts, coffee, certificates, and partnership cards).Distinguishing AspectsStore Layout: Factory inside the store where you can watch how the donuts are made.Reputation: Krispy Kreme has always been known as and has had a reputation of being the best.Hot Now: When the Hot Now sign outside the store is lit you can get hot and fresh original glazed donuts.Recent ActivityKK went public in April 2000 at $21/share, and within a year that number doubled.All seemed well for a couple of years, in spite of a few renegade analysts declaring KK stock “too high, given its modest quarterly net income.”Merrill Lynch downgraded stock to “sell” in October 2002; J.P. Morgan cut the rating to “underperform” in August 2003.Downward SpiralMany credible Wall Street names held on ‘til May 2004, when KK stock fell 29% in one day after KK issued a profit warning (they blamed the low-carb craze seizing the nation). By Sept ’04, the stock had plummeted 77%. Shares took another hit in late July ’04, when KK announced federal regulators were investigating the company.KK failed to file its SEC reports for over a year (failure to meet accounting and financial reporting obligations).. . . and it gets worse . . .defaulted on loansunable to borrow more moneytwo important franchises bankrupt (owed lots to KK)class-action lawsuit by stockholdersCEO, COO & CFO unloaded shares at peakcaught boosting profits by extorting franchisessold equipment and booked the revenue before payment was received – “cooking the books”“sweetheart deals”independent auditors refuse to sign off on KK’s financial statementCEO and six key officers firedrumors of de-listing on the NYSEBelowStock price of KK on the NYSE (name KKD) from initial opening in April 2000 at $21 per share, to its high of $49.74/share in August 2003, to its lowest of less than $4/share in early 2005, to its current of $8.41/share.To The RightGraph of KK’s number of retail outets. As the number of stores nationwide increases, sales decreases.What next?Krispy Kreme is struggling back into the market eye after a desperate tussle with near extinction.January 29th, 2007: KK announced it has finally become current in its SEC filings, and has since maintained that status.February 2007: introduction of a new whole-wheat doughnut: “made with 100% whole wheat . . . and, to make it even better, the doughnut is ONLY 180 calories!”April 2007: announces change in its board of directors and names new corporate officers. May 2007: Files its UFOC (Uniform Franchise Offering Circular), essentially declaring that it is once again, finally, licensing franchises.Sources•http://www.businessweek.com/2000/00_44/b3705148.htm•http://www.businessweek.com/2000/00_44/b3705148.htm•http://www.cfo.com/printable/article.cfm/4007436•http://www.krispykreme.com (. . .duh. . .)We used th’
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