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Non-Tech : Krispy Kreme Doughnuts, Inc. (KKD) -- Ignore unavailable to you. Want to Upgrade?

To: Jon Khymn who wrote (866)	4/14/2004 5:46:12 PM
From: Jon Koplik	Read Replies (1) \| Respond to of 1001

I hope Japanese are not "Atkins" diet fans ... Jon.

To: Jon Khymn who wrote (866)	5/7/2004 4:11:30 PM
From: Jon Koplik	Respond to of 1001

UPDATE: Krispy Kreme Seen Hurt By Rapid Expansion By FRANK BYRT May 7, 2004 3:06 p.m. Of DOW JONES NEWSWIRES BOSTON -- Carbohydrate-conscious consumers cutting back on doughnuts and disappointing new store sales are seen as factors contributing to Krispy Kreme Doughnuts Inc. (KKD) cutting back its fiscal 2005 outlook Friday. The company may be a victim of its own success as it has expanded the number of its own and franchisee-owned stores and continues to add sites that offer its packaged doughnuts, say some analysts. Andrew Wolf, an analyst for BB&T Capital Markets, said recent industry and company data suggest that the rise in doughnut sales is stagnating and Krispy Kreme's new store sales are showing signs of slowing even as it adds more stores. "They're sort of victims of their own success," he said. Krispy Kreme's management hosted a conference call for analysts Friday following a press release outlining the company's fiscal first-quarter expectations and revised fiscal 2005 estimates. The company, which is scheduled to report first-quarter results on May 25, expects earnings from continuing operations of 23 cents a share. The estimate doesn't include asset impairment charges. Wall Street expects the company to earn 27 cents a share for the period. The Winston-Salem, N.C., doughnut maker said fiscal 2005 earnings will be between $1.04 and $1.06 a share, excluding asset-impairment and other charges, compared with previous estimates of $1.16 to $1.18 a share. Analysts had expected, on average, 2005 earnings of $1.17 a share, according to Thomson First Call. The company attributed the lowered estimate to increasing consumer interest in low-carbohydrate diets, which hurt its off-premises sales. Shares of the doughnut maker hit a 52-week low Friday, but later rebounded slightly. They were down $8.04, or 25%, to $23.76, on volume on volume of 16.2 million, compared with average daily volume of 806,000. The low for the day was $23.49, well below the previous 52-week low of $30.20 on May 12, 2003. Year-to-date through Thursday, shares had lost 13.1%. J.P. Morgan analysts said in a research note addressing Friday's conference call that "in our opinion, the company did not properly address the issues of the rapid new unit development rate affecting same store on/off premise sales. "Management stated that franchisee health is very strong - a statement not supported by the broad decline in new unit average weekly sales and 'same door' off-premise productivity declines in older markets," the investment firm said. J.P. Morgan reiterated its underweight rating and said that even with the sharp stock price decline, "we do not recommend investors buy the stock," because the company's strategy of high new unit growth could cause a significant risk to earnings. J.P. Morgan said its analysts' compensation isn't directly or indirectly related to their recommendations, and that Krispy Kreme "is or was" a client of J.P. Morgan in the past 12 months. Legg Mason Wood Walker Inc. analyst Glenn Guard is more optimistic about Krispy Kreme, saying that the "long-term investment thesis is intact." He is maintaining his buy rating based on the company's brand strength, market leadership, growth potential in the grocery/foodservice sector, significant international opportunities, quality franchisees and attractive valuation. "People are not going to stop eating doughnuts, and Krispy Kreme continues to take market share away from competitors," Guard said in a research note, although he expects fiscal 2005 will have to go down "as a turnaround year." Guard said that no part of his compensation is related to his recommendations on Krispy Kreme. Legg Mason says that it regularly seeks investment banking assignments and compensation for its other services. Wolf, who has had Krispy Kreme rated hold since November, said he doesn't own Krispy Kreme shares, but his firm's parent, BB&T Corp. lends to the company. -By Frank Byrt, Dow Jones Newswires; 617-654-6742; frank.byrt@dowjones.com Copyright © 2004 Dow Jones & Company, Inc. All Rights Reserved.

To: Jon Khymn who wrote (866)	5/8/2004 11:54:05 PM
From: Jon Koplik	Read Replies (1) \| Respond to of 1001

NYT -- Krispy Kreme Runs Head-On Into a Low-Carb Wall. May 8, 2004 Krispy Kreme Runs Head-On Into a Low-Carb Wall By FLOYD NORRIS Krispy Kreme Doughnuts, the hot new stock offering of 2000 that stayed hot even as other new offerings plunged, has suddenly chilled. It blames the Atkins diet. Shares in the company - whose stores use flashing lights to notify customers when a fresh batch of doughnuts is ready - plunged 29 percent yesterday, closing at $22.51, down $9.29. The stock has lost more than half its value since it peaked last August at $49.74. "For several months, there has been increasing customer interest in low-carbohydrate diets," said Scott A. Livengood, the chairman and chief executive, adding that the most serious effect on Krispy Kreme had come in grocery store sales, where it has been expanding its business. As a result, the company said, it did not earn as much as it had expected in its first quarter, which ended May 2, and was cutting its forecasts for the fiscal year by about 10 percent. The company is to report quarterly results on May 25. "I hope it's a fad," Mr. Livengood said of low-carbohydrate diets. But if the trend accelerates, company officials said, profit forecasts might have to be reduced further. Krispy Kreme itself was viewed by some as a fad, with long lines outside new stores as it expanded from its base in the Southeast United States to most of the United States, as well as Canada, Mexico, Britain and Australia. But now Krispy Kreme is closing a handful of company-owned stores and reducing plans to open new ones. "For the first time in recent memory, retail customer counts have declined," said John W. Tate, the chief operating officer. Krispy Kreme doughnuts have been around since 1937, but it was only in the 1990's that they became a phenomenon. The company opened its first store in New York in 1996 and promptly gained a cult following. But New York now appears to be a problem for Krispy Kreme. Mr. Tate said yesterday that the company was trying to renegotiate its arrangement with a joint-venture partner to reduce its risks in the city. "I consider New York to be a very special geography," he said. "It is best for us and our shareholders if we do not participate heavily in the development costs." He did not elaborate. Krispy Kreme also said it was closing its Montana Mills Bread stores, an operation that it bought a year ago and that as recently as mid-April it said it planned to continue refining and expanding. It said it would take a write-off of as much as $40 million on the venture. Until recently, the company appeared to be nearly unstoppable. When the shares were first sold to the public in April 2000, during the boom in high-technology public offerings, Krispy Kreme was hailed as an old-economy growth story. The shares rose 76 percent the first day of trading, and did not look back. Even as the new high-technology issues lost most of their value, Krispy Kreme surged ahead. Short-sellers criticized the company's high ratio of price to earnings. Even after yesterday's fall it is selling at more than 20 times its estimate of operating earnings, before charges, of $1.04 to $1.06 for the current fiscal year. But its profits grew, and so did its share price. Even including the big decline yesterday, investors who got in at the offering or within a few months of it have good profits. The offering price, adjusted for two stock splits in 2001, was $5.25 a share. But the stock price yesterday was the lowest in three years. Until yesterday, the company had never reported profits that failed to meet its forecasts, but there had been signs that its business was not the growth engine it had seemed to be. Just two months ago, it told investors it had not seen "a measurable impact" from low-carbohydrate diets, but it also reported a decline in average weekly sales per store, sending the stock down 10 percent in a day, to $34.22 a share. Volume yesterday came to 20.5 million shares, the largest ever for Krispy Kreme and amounting to a third of the shares outstanding. The volume yesterday was greater than the number traded during the entire month of April. Mr. Livengood told investors on the conference call that despite the problems, there was plenty of growth left for the company. "We are only beginning to scratch the surface of our potential," he said. He added that the company's franchisees "remain extremely successful" and said in answer to a question that "there are no plans to reduce royalties, or no need to even consider anything of that sort." Copyright 2004 The New York Times Company.

To: Jon Khymn who wrote (866)	5/10/2004 8:37:15 AM
From: Jon Koplik	Read Replies (1) \| Respond to of 1001

(5/10/04) WSJ -- Krispy Kreme Issues Profit Warning. May 10, 2004; Page A8 Krispy Kreme Issues Profit Warning After 1st Forecast Reduction Since IPO, Stock Falls 29%; Low-Carb Fervor Is Blamed By CHAD TERHUNE Staff Reporter of THE WALL STREET JOURNAL It isn't just the Atkins diet that is giving Krispy Kreme Doughnuts Inc. a tummy ache. The Winston-Salem, N.C., doughnut maker Friday issued its first profit warning since going public in April 2000. Its shares plunged 29%, or $9.29, to $22.51 in 4 p.m. New York Stock Exchange composite trading, leaving the highflying stock at less than half of its August 2003 value. Carbohydrate-conscious dieters got most of the blame for a slowdown in sales that Krispy Kreme said forced it to lower its earnings target for the current fiscal year by 10%. "It's hard, if not impossible, to predict whether this low-carb phenomenon is a passing fad or a fundamental, lasting change in consumer behavior," said Scott Livengood, Krispy Kreme's chairman and chief executive. Some analysts were skeptical of the company's explanation, suggesting other cracks in its growth strategy. "We believe many issues are internal," said John Ivankoe, a J.P. Morgan analyst. He said Krispy Kreme stores are experiencing declining sales as the chain opens more outlets nearby and the company is growing too reliant on sales in off-site locations that are less profitable. John Tate, Krispy Kreme's chief operating officer, said Friday that "retail customer counts" in Krispy Kreme stores have declined slightly "for the first time in recent memory," nearly wiping out the higher revenue the company gets from boosting doughnut prices. The company's average weekly sales declined last fiscal year for the first time since Krispy Kreme went public at a split-adjusted price of $5.25 a share. Rapid-fire store expansion has been crucial to Krispy Kreme's growth formula. Now the company expects systemwide store openings to drop to about 100 this year, from its previous goal of 120. Krispy Kreme also will close six factory stores and six smaller outlets, including three in a test with Wal-Mart Stores Inc. Krispy Kreme has 374 stores overall. Krispy Kreme's business is split about evenly between off-premise sites and retail stores. But off-premise sales have slowed, leaving boxes of unsold doughnuts piled up on display tables. Also just a year after acquiring bakery chain Montana Mills Bread Co. for $37.8 million in stock, Krispy Kreme said it plans to close the majority of the bakery stores and sell off the remaining outlets. The move will result in a noncash charge of $35 million to $40 million in its fiscal first quarter ended May 2. The current fiscal year ends Jan. 30, 2005. Mr. Livengood said that some of the company's headaches aren't directly related to the low-carb trend. But he dismissed any suggestion that Krispy Kreme's overall prospects had dimmed. "I would disagree with the characterization there is any unraveling," Mr. Livengood told analysts. "We are only beginning to scratch the surface of our potential." Krispy Kreme still expects sales to increase 24% in its fiscal first quarter. Copyright © 2004 Dow Jones & Company, Inc. All Rights Reserved.