UPDATE: Krispy Kreme Awards Franchise To Hong Kong Group .....................
DOW JONES NEWSWIRES
June 6, 2006 3:08 p.m.
RALEIGH, N.C. (AP)--Krispy Kreme Doughnuts Inc. (KKD), recovering from internal accounting problems that led to investigations and the ouster of its chief executive, said Tuesday it was again looking abroad to reach new markets.
The Winston-Salem, N.C., snack maker said it has awarded rights to Krispy Kreme Hong Kong Ltd. to establish sales outlets on the prosperous islands of Hong Kong and Macau. The owners of the franchise already operate other restaurants in Hong Kong and Vietnam.
"This development agreement represents another step forward in the company's turnaround," Krispy Kreme President and Chief Executive Daryl Brewster said in a prepared statement.
The first store is expected to open in Hong Kong this fall, according to Krispy Kreme.
Last month, Krispy Kreme said it awarded Middle East development rights to a group that would open 100 locations in the next five years in Egypt, Kuwait, Saudi Arabia and the United Arab Emirates. In both China and the Middle East, Krispy Kreme will have no ownership position in the franchisee.
Krispy Kreme also has stores in Australia, United Kingdom, Canada, Mexico and South Korea.
While Krispy Kreme said it sees international markets as a growth opportunity, the company has been selling off its ownership stake in its ventures with foreign partners.
In November, Krispy Kreme sold its 35% equity in the partner developing markets in Australia and New Zealand. A month later, the company agreed to sell its 35% stake to its partner in the United Kingdom.
But in April 2005, Krispy Kreme was forced to take over its Canadian developer's approximately 60% share when KremeKo Inc. filed for bankruptcy protection.
As of January, 68 Krispy Kreme stores operated internationally, up from 37 the previous January.
Krispy Kreme continues to be under investigation by the Securities and Exchange Commission and federal prosecutors.
A special committee of independent directors blamed much of Krispy Kreme's financial problems on former chief executive officer Scott Livengood and another executive.
Krispy Kreme shares recently fell 4 cents, or 0.5% to $8.75.
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