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


To: Toby Zidle who wrote (891)7/14/2004 10:26:19 AM
From: Jon Koplik  Respond to of 1001
 
WSJ -- Krispy Kreme CFO: No Evidence Diet Dynamics Changed Vs 1Q.

July 14, 2004

Krispy Kreme CFO: No Evidence Diet Dynamics Changed Vs 1Q

DOW JONES NEWSWIRES

By Mary Ellen Lloyd
Of DOW JONES NEWSWIRES

CHARLOTTE -- Krispy Kreme Doughnuts Inc. (KKD) hasn't seen evidence that the low-carbohydrate diet phenomenon that contributed to its disappointing first-quarter results has changed much, company Chief Financial Officer Michael Phalen said Wednesday.

"We have not seen any reason to believe that the dynamics have improved from what we discussed in the first quarter," Phalen said at a CIBC conference in Boston, which was broadcast on the Internet.

Krispy Kreme posted its first quarterly loss as a public company and pulled back on its expansion in May, hurt by waning demand and last year's acquisition of a chain of bread stores the company plans to shed.

Other than that comment, Phalen and Chief Operating Officer John Tate didn't comment on second-quarter business trends during the presentation. A question-and-answer session wasn't broadcast on the Internet.

Both men, however, described growth opportunities for the Winston-Salem, N.C., doughnut maker.

Tate said the popularity of low-carb diets coincided with a time that Krispy Kreme had a dearth of new products, something the company plans to fix this year. "We believe that exacerbated the problems that we saw," he said.

He reiterated plans to roll out packaged coffee sales and new package sizes and product combinations among Krispy Kreme's wholesale accounts. Krispy Kreme also plans to introduce bite-sized doughnuts, chocolate-glazed doughnuts, and a sugar-free doughnut later this year at its roughly 400 stores.

Krispy Kreme just completed rolling out a line of frozen beverages to all stores, he said.

"Top line was what killed us in the first quarter and restoring that top line is what we need to get back to where we want to be," Tate said.

Phalen said Krispy Kreme also sees growth opportunities in gaining market share, increasing sales per capita and expanding internationally.

Krispy Kreme believes it has just over 15% of the estimated $6 billion U.S. market for doughnuts sold in across all distribution channels.

Per capita sales were $3.28 in fiscal 2004, but Krispy Kreme has a target of boosting that to $12 to $15, based on its experience in some company-owned markets and based on other retailers' experiences, Phalen said. Dunkin' Donuts, for example, has per capita sales of $9.25, and Dairy Queen generates per capita sales of just under $7, he said.

Krispy Kreme is pleased with the performance of its stores in the United Kingdom, Australia, Mexico and Canada, and the chain is in the early stages of capitalizing on what it considers a "vast international opportunity," Phalen said.

-By Mary Ellen Lloyd, Dow Jones Newswires; 704-371-4033; maryellen.lloyd@dowjones.com

Copyright © 2004 Dow Jones & Company, Inc. All Rights Reserved.



To: Toby Zidle who wrote (891)7/26/2004 10:48:30 PM
From: Jon Koplik  Respond to of 1001
 
WSJ article on Boston / high number of doughnut stores.

July 26, 2004

Boston's Big Dig Isn't the Only Hole That's Famous Here

Area Has One Doughnut Store For Every 5,750 Residents; Mr. Shannon Has a Cream

By ROBERT TOMSHO
Staff Reporter of THE WALL STREET JOURNAL

BOSTON -- With thousands of volunteers lined up to man information kiosks and serve as "Beantown Buddy" guides, delegates to this week's Democratic National Convention will get plenty of help finding landmarks like Fenway Park and Bunker Hill.

But out-of-towners who do get lost on the city's winding streets won't have any trouble tracking down another unlikely icon of Boston life: the doughnut shop.

There are at least 1,050 of them in the Boston market, according to NPD Group Inc., a Port Washington, N.Y., marketing-information concern. That sifts out to one doughnut store for every 5,750 residents -- nearly eight times the national average. Among American cities, only Providence, R.I., Boston's much smaller New England neighbor, has more doughnut shops per capita. Boston also has many hard-to-track doughnut stands that NPD says it may be missing, in locations such as service stations, sandwich shops and hardware stores.

When local television producer David Andelman was looking for a condo in downtown Boston, he told his real-estate agent he wouldn't live anyplace where he couldn't walk out the door, punt a football and hit a Dunkin' Donuts outlet. Now, he lives on the 28th floor of a building with two of them, on adjacent corners. "I experiment, kind of like a wine-tasting," he says. "How does a hazelnut [coffee] go with a chocolate doughnut? How does a decaf go with a glazed?"

Retired rental-truck worker Donald Nicholson has been going to the Donut King, in neighboring Quincy, Mass., nearly every morning for 15 years. He favors the mom-and-pop shop's mammoth cake doughnuts, adding that anybody he needs to see is usually there. "You need your car fixed, there's a mechanic," the 69-year-old says. "You need your pipes fixed, there's a plumber."

Doughnuts are thriving in Boston even in an era of carbohydrate conniptions and trans-fat trepidation. Consider the great doughnut debate.

State Sen. Charles Shannon, a former policeman, sparked it when he set out to name an official state doughnut at the behest of some grade-school students from his district, north of town. They wanted to honor the Boston cream, a custard-filled concoction slathered with chocolate icing.

But politicians from the hinterlands balked at designating a pastry so closely associated with the big city. Cele Hahn, then a state representative from Westfield, complained that, in her neck of the woods, Boston creams were known as "Long Johns" and "Bavarian creams."

Doughnut Debate

"Should selling Boston cream doughnuts be mandatory of bakeries?" Ms. Hahn wrote in one 2001 newspaper column. "How about mandatory eating?"

After six years of wrangling, Sen. Shannon finally claimed victory for the Boston cream last year, but not before critics started calling him Sen. Doughnut.

Doughnut-like desserts have been part of the local cuisine since colonial times. But the pastries got a big boost with the 1950 founding of Dunkin' Donuts in Quincy. These days, the company is a unit of the British conglomerate Allied Domecq PLC, but 875 of its 3,900 U.S. stores are still located in the Boston area. "It's a New England institution," says John Glass, a food-industry analyst in Boston for CIBC World Markets. "It's like the Red Sox or the Boston accent."

Or a piece of the American dream for Victor and Octavio Carvalho, franchisees who now own the original Dunkin' store in Quincy. Sons of a Portuguese immigrant who got into the doughnut business in 1979, the brothers are part of an extended family that owns about 400 Dunkin' outlets. "You go to a family wedding and it's like a corporate event," says Octavio Carvalho.

Industry analysts say that for years, Dunkin's dominance helped deter North Carolina's Krispy Kreme Doughnuts Inc. from entering the market. A spokeswoman for Krispy, which recently opened its first outlets in Boston, says the delay was simply a matter of finding the right franchisee and real estate, and wasn't affected by Dunkin's market share. Meanwhile, Tim Hortons, the big Canadian doughnut chain, a unit of Wendy's International Inc., just entered the market with the purchase of a Rhode Island chain that has several stores in Massachusetts.

Then there is Honey Dew Doughnuts, in suburban Braintree, which has 120 stores in the Boston area and plans to open 100 more here in the next 10 years or so in places like hospitals, college campuses and sports stadiums.

The heightened competition has sparked zoning and licensing battles as chains vie for a shrinking pool of prime locations and citizens groups fight back against traffic at doughnut drive-thrus and changes to their neighborhoods. "But I think we have an easier time because we are purely local," says Jim McKenna, Honey Dew's executive vice president, who refers to British-owned Dunkin' as "that United Kingdom conglomerate."

Taking on the doughnut chains isn't easy. Just ask exercise enthusiast Mark Fenton, host of the PBS television series "America's Walking" and an elected member of the planning board in Scituate, a small coastal town just south of Boston.

After a second corporate-owned doughnut store sought to open in Scituate earlier this year, Mr. Fenton mounted a public counterattack, arguing that the chains would drive out local businesses, change the quaint town's character and add to the nation's obesity epidemic. The town council backed his proposal to ban such outlets but, when the issue went before citizens at the town's annual meeting in March, it failed by eight votes. "It's shocking to me," says Mr. Fenton, who adds that he has never set foot in such a doughnut store and probably never will.

Breaking free of such deep-fried tradition has been more difficult for politicians like Boston City Councilman John Tobin, who last year mounted a crusade against childhood obesity, urging the Boston schools to get fatty foods out of the cafeterias and encourage kids to get more exercise.

Even so, the councilman is also a former doughnut-shop worker and, when he wants to hold constituent meetings, he knows it's important to schedule them in places where people like to gather. In the West Roxbury neighborhood he represents, that would be Anna's Hand Cut Donuts.

"I just have the coffee," Mr. Tobin says.

Write to Robert Tomsho at rob.tomsho@wsj.com

Copyright © 2004 Dow Jones & Company, Inc. All Rights Reserved.



To: Toby Zidle who wrote (891)7/29/2004 1:13:07 PM
From: Jon Koplik  Read Replies (1) | Respond to of 1001
 
WSJ -- Krispy Kreme Discloses SEC Probe.

July 29, 2004

Krispy Kreme Discloses SEC Probe

A WALL STREET JOURNAL ONLINE NEWS ROUNDUP

Krispy Kreme Doughnuts Inc. disclosed that the Securities and Exchange Commission is conducting an informal inquiry regarding the doughnut seller.

In a statement, Krispy Kreme said the inquiry "generally concerns" the company's franchise repurchases and its previously announced reduction in earnings guidance. Krispy Kreme said it is "fully cooperating with the SEC" in response to requests for information.

Krispy Kreme shares were down 11% to $16.56 in midday trading on the New York Stock Exchange. The company disclosed the inquiry shortly before the open of trading in New York.

Since going public in 2000, Krispy Kreme has faced questions about its accounting transparency and potential for conflicts of interest in investments that its executives made in its franchises. Investors bought the sugar-fueled stock anyway.

But, as The Wall Street Journal reported in May, two recent deals in which Krispy Kreme bought back franchisees could spark new concerns. Some independent accounting experts say the Winston-Salem, N.C., company may have used aggressive bookkeeping to boost its earnings when it acquired its Michigan franchise last year. In the other buyout, completed in January, Krispy Kreme didn't disclose that one of the sellers was Chief Executive Scott Livengood's ex-wife, whose share was valued at about $1.5 million.

In a statement Thursday, Mr. Livengood said that Krispy Kreme "has no higher priority than the confidence of our shareholders, customers and employees. While we are confident in our practices, we understand and respect the SEC's responsibilities and will continue to cooperate fully throughout this process."

Write to the Online Journal's editors at newseditors@wsj.com

Copyright © 2004 Dow Jones & Company, Inc. All Rights Reserved.