Krispy Kreme Doughtnuts Krispy Kreme Doughtnuts (KKD)(KKD)

Matt Pregozen

Krispy Kreme Krispy Kreme RecommendationRecommendationBuy: Limit at $3.65Sell: Limit at $4.35

BackgroundBackground1937- Vernon Rudolph bought secret

yeast recipe from a French chef in New Orleans

Expanded from local store to nation wide chain of stores

Headquartered in Winston Salem, North Carolina

580 stores worldwide in 18 countries93 company owned and 430

franchisees2,700 full time employees

Source: http://finance.yahoo.com/q/pr?s=KKD http://www.krispykreme.com/history.html

Business OperationsBusiness OperationsRetailer and Wholesaler of

Doughnuts and Sweets20 varieties of doughnuts

(packaged and unpackaged)

Sells own brand of coffeeSells equipment and

supplies to franchisesHave donut fundraisers

with youth groups

Source: http://finance.yahoo.com/q/pr?s=KKD

RetailRetailStandalone store with seatingMakes donuts fresh in store

Source: http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=KKD

WholesaleWholesaleSold at supermarkets,

convenience stores, gas stations, Wal-Mart, and Target

Deliver boxed doughnuts and unpackaged donuts daily

Source: http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=KKD

Stock NumbersStock NumbersCurrent Price:

$4.21P/E Ratio: N/ABeta: 1.86EPS: -$0.0152-Week Low: $1.3452-Week High: $4.75Market Cap:

$256.94MInstitutional Ownership: 29%

As of 3/18/2010 from Google Finance

1 Month1 Month

Yahoo Finance: http://finance.yahoo.com/echarts

3 Month3 Month

Yahoo Finance: http://finance.yahoo.com/echarts

6 Month6 Month

Yahoo Finance: http://finance.yahoo.com/echarts

KKD (Blue) KKD (Blue) vs vs Starbucks Starbucks (Red) (Red) vs vs Tim Hortons (Green)Tim Hortons (Green)

Yahoo Finance: http://finance.yahoo.com/echarts

CompetitorsCompetitorsDunkin Donuts- Privately owned

Starbucks- coffee shop with 8,800 worldwide locations◦Over expanded- downsizing and consolidating◦Current products are too expensive for

consumers

Tim Hortons- fast food restaurant in USA and Canada◦Saturated market in Canada with 3,015 stores◦Expansion in US faces tough competition

Source: http://www.reuters.com/finance/stocks/ http://voices.washingtonpost.com/economy-watch/2009/01/starbucks_closing_hundreds_of.html and http://money.cnn.com/news/newsfeeds/articles/reuters/MTFH12232_2010-03-05_17-15-23_N05193145.htm

Social ResponsibilitySocial ResponsibilityGave away free donuts during

2008 Election if you voted

Source: http://www.usatoday.com/money/industries/retail/2008-11-03-voter-free-stuff_N.htm

Reasons to BuyReasons to BuyJob market is recovering =

doughnuts and coffee at officeRumor that Wendy’s will buy

Krispy KremeIn the middle of restructuring, so

future has potentialUpcoming Earnings Report

3/29/2010Source: http://www.dispatch.com/live/content/business/stories/2009/11/27/WENDYS_KRISPY.ART_ART_11-27-09_A16_MPFQ789.html and http://investor.krispykreme.com/

VAR (Value Added VAR (Value Added Research)Research)

Original Glazed Donut Taste Test

Label Votes Brand

A 13

B 5

QuoteQuote

“Donuts. Is there anything they can’t do?”

-Homer Simpson