Magazine article Management Today

Behind the Spin: Krispy Kreme

Magazine article Management Today

Behind the Spin: Krispy Kreme

Article excerpt

THE DILEMMA

The iconic American creator of such doughnuts as the New York Cheesecake, the Caramel Kreme Crunch or the paradoxically named Doughnut Hole is in a sticky predicament. Founded in 1937 in North Carolina, Krispy Kreme reached a pinnacle of cool when it featured in Sex and the City in the early 2000s. But like the dot.com bubble, the glazed doughnut frenzy imploded. Too rapid geographical expansion (including a concession in Harrods), greedy investors and the US switch to a low-carb diet meant that Krispy Kreme had to issue its first profit warning in 2004. Under former CEO Scott Livengood, Krispy Kreme faced a federal investigation and shareholder lawsuits, while owning up to accounting irregularities.

THE SPIN

Producing 7.5 million doughnuts a day in North America alone, Krispy Kreme is in no danger of collapse, despite the rocky road it's on. New CEO Daryl Brewster, a former Kraft Foods president, is leading the company to recovery. 'Rather than get mired in the past, the focus for us is to really value the future,' he said recently.

THE STRAIGHT TALK

Brewster's optimism doesn't hide the fact that Krispy Kreme has had 12 straight losing quarters in a row. Its stock was trading at the dollars 3 mark in September - compare that to the dollars 50 level it approached in 2002. …

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