3/24/08
Krispy Kreme Top-Management
From: Jason Hasan
A MASTER PLAN
Executive Summary
The main objective of this case memo consists of analyzing financial data and developing a new strategy for Krispy Kreme to promote financial growth and stability. Provided will be a brief introduction of Krispy Kreme’s current crisis situation, which includes falling stock prices and unethical behavior, as well as greed and rapid expansion as possible culprits of the downfall. After financial data was analyzed, logical future options for Krispy Kreme include selling the company, product innovation, and trimming store levels. Recommendations for future growth and methods to get Krispy Kreme back on track are provided.
INTRODUCTION
When Krispy Kreme went public in April of 2000, the future outlook of the company was very promising and profitable. Investors rushed to buy into a business that had a solid foundation, and was increasing sales and profits at a measured pace. In the summer of 2003, Krispy Kreme was trading at over $50 per share, which was a huge percentage increase in such a short period of time. The company was extremely attractive and many investors bought up several shares as long-term investments. In May of 2004, as quickly as Krispy Kreme rose to prominence, it tumbled downwards and lost much of its popularity. The company may near bankruptcy, and it reported its first losses and missed quarterly target. To worsen the damage, the SEC questioned Krispy Kreme’s purchases of several franchises, and investors filed suite for the rapid plunge in share price. In early May of 2005, Krispy Kreme’s share price was trading at only $6 per share. The question at hand is “What went wrong?” with a business in service for over 70 years ...