Part II:
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Some experts also wonder how much of the $72.5 million raised in the IPO of three million shares and an overallotment of
450,000 will actually go toward expansion. According to the prospectus, the company will use the proceeds to pay off $30
million in debt and $10 million to update older company-owned shops, some of which are 30 years old. In addition, $7
million goes to company insiders as part of a corporate reorganization in which every share they owned in the privately held
company was converted into 20 shares of stock in the new, publicly held firm, along with $15 in cash.
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Says Mr. Lombardi, the food-service consultant: "So many times you've seen cases where restaurant stocks come out, soar,
and then reality sinks in. We'll find out in two months or so."
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By Kelly Greene
Staff Reporter of The Wall Street Journal's Florida Journal
The "Hot Doughnuts Now" sign was blazing on Wall Street last week. But now,
some experts think that investors wanting to get in on Krispy Kreme Doughnuts
should wait for the stock to cool off.
Steve Hungerford, a Winston-Salem investment adviser who can see the sign at
Krispy Kreme's headquarters from his office window, says that his firm, Woodard
& Co. Asset Management Group, has been telling its clients to wait until the
stock drops back to the $20s. "Krispy Kreme's management - they're not idiots.
They priced the stock at a fair value. It should probably be in the $21 to $25
range."
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My wife and I drove up to the City of Orange in Orange County yesterday just to see the action at a few stores. We couldn't
believe the number of cars driving through and the number of customers lining up to buy dozens and dozens of doughnuts.
Every conceivable type of person, including gobs of children, were wolfing down doughnuts, milk, orange juice, coffee, etc.
We drove over to the Huntington Park KK and saw the same thing; although a little less active at dinner time.
With this kind of volume patronage it looks something like the McDonalds of doughnuts.
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I live in the Bay Area and decided to go and get some KK's last night at about ten P.M. at the new KK location in Union
City. The bottom line was is this; The store was packed(standing room only) with a line extending far out of the building. The
drive through line was snaking around a movie theater parking lot at least a half a mile. It looked like people waiting in line
for concert tickets or something. I have never in all my years seen such a huge crowd for the opening of a food store. It was
a carnival atmosphere, un-believable! So did I wait in line?...Of course! It took a little over 45 minutes to get a hand on the
goods and it was worth it! This should speak volumes for the company and it's shareholders. Krispy Kreme donuts is a
winner and I think I might buy a few shares for myself (it'l be easier then getting a dozen of donuts). |
