(a case study regarding managing maturation) by rebecca marian l aguilar i time context this case considers the sudden and very large drop in the market value of equity for krispy kreme doughnuts, inc, associated with a series of announcements made in 2004. Krispy kreme operates 16 countries and became the world's famous doughnuts time context in the year 1937, krispy kreme was founded by vernon rudolph but experienced its turning point when he died in the mid-1970's and the company was sold to beatrice foods. Krispy kreme scope the scope of this report is to analyze krispy kreme dounghnuts' (kkd) financial statements, supported exhibits, and business plan to evaluate the impact of earnings analysis announcements on the stock price for 2003-2004. This case provides you with the opportunity to assess analyst forecasts of krispy kreme's earnings following the release of its february 3, 2002 financial statements through analysis of footnote disclosures on the company's joint ventures and repurchased franchises, you will identify potential problems with krispy kreme's business. Krispy kreme krispy kreme was a thriving doughnut company with rapid growth from 2000-2004 the company tripled its number of stores from the start of 2000 to nearly 500 stores and expanded their sale of doughnuts to 20,000 supermarkets, convenience stores and other outside locations.
Read the following krispy kreme doughnuts, inc case study and determine if krispy kreme is financially healthy review the data from the financial statements and ratios provided in the case. The story of krispy kreme's troubles is, at bottom, a case study of how not to build a franchise according to one count, there are at least 2,300 franchised businesses in the united states, and. Krispy kreme doughnuts was a successful privately owned business since 1937 in 1982 a group of franchises bought back the company from beatrice foods for $24 million, and reintroduced the old recipe of doughnuts and their hot doughnuts now system.
Krispy kreme doughnuts, inc announced on may 10, 2004, based on recent category dynamics, it expects fiscal 2005 diluted earnings per share from continuing operations, excluding certain charges, to be 10% lower than previously announced at 30% more than their 2004 profits of $665,592,000. Assignment help case study case: forecasting: krispy kreme donuts krispy kreme donuts has achieved spectacular growth in the last few years using an area developer model to expand geographically. Teaching note synopsis and objectives this case considers the sudden and very large drop in the market value of equity for krispy kreme doughnuts, inc, associated with a series of announcements made in 2004. Putting in a correction for the litigation payout in 4q2003, per share earnings growth went from 66% (2001 to 2002), to 51% (2002 to 2003), to 35% (2003 to 2004), to a projected 27% (2004 to 2005) even right before the earnings miss kkd had a trailing p/e of 35, which some might argue is a bit high for a company projecting 27% earnings growth.
The story of krispy kreme's troubles is, at bottom, a case study of how not to grow a franchise according to one count, there are at least 2,300 franchised businesses in the united states, and. Krispy kreme doughnuts needs to restate past profits downward by $256 million, says a report from a special committee investigating the winston-salem, nc-based doughnut maker's financial. The company has ambitious growth plans for the years 2003 and 2004 based on these plans of the company, on the business concept, on the opportunities and on the competitive situation two analysts from cibc world markets have forecasted the business performance and financial situation of krispy kreme doughnuts in 2003 and 2004. Context this case considers the sudden and very large drop in the market value of equity for krispy kreme doughnuts, inc, associated with a series of announcements made in 2004 those announcements caused investors to revise their expectations about the future growth of krispy kreme, which had been one of the most rapidly growing american.
Krispy kreme had more cash assets available 2004 compared to 2000 this is why the company was able to recover from the loss of montana mills the steady growth and quick recovery shows the krispy kreme is a financially healthy company. Krispy kreme doughnuts essay sample question 1: analysts are predicting that krispy kreme will be able to perform highly effectively and continue to grow rapidly in the coming two years. Forecast capital structure as noted abovebeginning long-term assets have increased as a percentage of sales from 20% to 25% in year 2001 and 2002 2002 operating assets beginning net working capital beginning long-term assets 21 we have assumed that kkd's negative net debt position will be eliminated by the beginning of 2004843 210. The net profit margin at krispy kreme grew from below 10 to nearly 20 per cent between 2000 and 2003, but tumbled in early 2004 revenues grew from 2000-03 because of company store and franchise expansion, increasing volume, deployment of more space-effective equipment, and a growing number of two-income households in the us.
A more nuanced view of krispy kreme's current and expected performance to alleviate some confusion that might otherwise arise when reading these teaching notes, the subsequent analysis includes some additional deﬁnitions. A case study on krispy kreme doughnuts, inc company overview krispy kreme is a company that despite its history dating back to 1937, has only started to experience rapidly increasing sales, expansion, and customer awareness in the last few years. Precision pharma services, inc is a new business wich ©2003, km corporation krispy kreme case study author: jamive.
The cost of the krispy kreme case study solution is $29, and can be immediately downloaded after the purchase is made via the paypal link below the solution is over 4,300 words in a word file. Krispy kreme was the second most successful ipo of 200012 on may 17, 2001, krispy kreme transferred its common stock from nasdaq to the new york stock exchange, changing its ticker to kkd 3. Krispy kreme went public in 2000 and was immediately successful by august 2003, shares prices reached $50, 235 times higher than the initial public offering price of $21.