Krispy Kreme Doughnuts (KKD)

Krispy Kreme continues to lose market share in it's wholesale operations at a very brisk pace. The major competitors who are taking advantage of KK's misfortunes are Hostess, Dolly Madison, Entenmann's, and Little Debbie. This company has got to decide if they are going to remain in this channel or not.

The management team at KK can't decide whether they want to stay in the wholesale/grocery business or run the company as a retail operation. A lot of turmoil in the trenches.

Krispy Kreme continues to lose market share in their wholesale business to competitors (i.e. Hostess, Entenmanns, & Private label). KK's wholesale business has been in a steep decline for the last 3 years.

At a time when most everything is somewhat less expensive due to decreasing revenue dollars, where are the idea people charged with advertising, product development and an introduction into todays 'lighter' options. Is the company willing to simply fade into the sunset without even offering creative plans for the future? The shareholders and the franchise owners would like to see some sign of life at the corporate level.

There has been a lot of turmoil at this doughnut maker. On January 7, 2008, the CEO was replaced by Chairman James Morgan.

The fundamentals on this stock are dismal.

In 2005 these results diverged with revenue continuing to grow to $708 million but the company turning in a large loss of $(3.22)/share. Since 2005 revenue has slipped sequentially down to $461 million in 2007 and $431 million in the trailing twelve months (TTM). Earnings have shown consistent although decreasing losses with $(2.20)/share reported in 2006, $(.70)/share in 2007 and $(.90)/share in the return on equity. The company is reported to have an additional $114.7 million in long-term liabilities.