Krispy Kreme Is Growing
Krispy Kreme celebrates its 75th birthday on July 13. With this celebration are reminders not to commit the mistakes of the past. Top executive Jim Morgan said at its annual shareholders meeting that Krispy Kreme’s potential “is greater than anyone in this room can understand.” Krispy Kreme experienced major loses from 2004 to 2010. Winston-Salem Journal reports that the company has its second consecutive profitable year in 2012. Morgan bared his company’s plans to open more shops in Brazil, India, Russia and China. It also wants smaller free-standing stores of 2,200 – 3,000 square feet area for drive-through sales.
Jim Morgan, the company’s top executive, said at its annual shareholders meeting Tuesday that Krispy’s potential “is greater than anyone in this room can understand.”
The current management team was put in place in 2007-08.
Financial and strategy missteps by previous management resulted in lengthy investigations by the Securities and Exchange Commission and major losses from fiscal 2004 to fiscal 2010.
“We’re cautious people by nature,” Doug Muir, chief financial officer, said in referring to the current management team. “We’re mindful of mistakes the company made in the past. We’re determined not to repeat them.”
Morgan said he believes Krispy Kreme has made good on its 2008 pledge to build a new foundation and its 2010 pledge to produce sustainable profitability.
The company reported its second consecutive profitable year at $22.1 million in fiscal 2012, which ended Jan. 29.
Krispy expects to post operating income between $29 million and $33 million, compared with $25.6 million for fiscal 2012.
At the 2011 shareholders meeting, Krispy Kreme’s share price was at a 52-week high of $9.15 a share.
The share price rose 11 cents Tuesday to close at $6.16.
By comparison, the stock was at an all-time low of $1.18 a share in February 2009.
Morgan reiterated Krispy’s plans to go from 458 internationalshops to at least 900 by fiscal 2017. Its top short-term goals are to enter Brazil, establish footholds in India and Russia and expand in China.
In May, the company showed at a Gastonia factory shop a doughnut-making machine that is 13 feet shorter than the traditional machine.
As a result, Krispy plans to open more free-standing stores between 2,200 and 3,000 square feet compared with traditional 3,500 to 5,000 square feet. That’s important, Morgan said, because more than half of its U.S. sales are generated at drive-through windows.
Muir said Krispy has spent $14.7 million to repurchase 2.25 million shares at $6.51 a share. Its board of directors authorized in March repurchasing up to 20 million of its 66.6 million outstanding shares. …
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