Krispy Kreme case
Synopsis
With its sensational donuts, Krispy Kreme created a cult like following among their consumers and professional investors alike. Krispy Kreme’s simple business model was easy for most people to understand; they sold donuts, and the more they could sell the better the company did financially, or so they thought. From its IPO in April 2000, at the peak of the internet boom, Krispy Kreme was led by CEO Scott Livengood who expanded the company rapidly taking it from a small town donut shop to an international brand. One year after its IPO, Krispy Kreme was trading at 62 times earnings and on August 22, 2003, Krispy Kreme's stock price was at its all time high of $49.74, up 235% from the $21 IPO price. With people all over the nation screaming for Krispy Kreme donuts and what seemed like every Wall Street firm recommending KKD as a buy, Krispy Kreme looked poised to continue its exceptional growth.
Unfortunately, only 9 months later in May 2004, Krispy Kreme’s growth to stardom was quickly halted when it reported negative earnings followed by a SEC investigation on its accounting practices that will be discussed in this case study.
Table of Contents
Page 1..............................................................................................................................Cover Page
Page 2....................................................................................................................Table of Contents
Page 3...............................................................................................................About Krispy Kreme
Page 3......................................................................................................................Growth Strategy
Page 4......................................................................................................................Growth Strategy
Page 4………………………………………………………………………...….Accounting Flaws
Page
With its sensational donuts, Krispy Kreme created a cult like following among their consumers and professional investors alike. Krispy Kreme’s simple business model was easy for most people to understand; they sold donuts, and the more they could sell the better the company did financially, or so they thought. From its IPO in April 2000, at the peak of the internet boom, Krispy Kreme was led by CEO Scott Livengood who expanded the company rapidly taking it from a small town donut shop to an international brand. One year after its IPO, Krispy Kreme was trading at 62 times earnings and on August 22, 2003, Krispy Kreme's stock price was at its all time high of $49.74, up 235% from the $21 IPO price. With people all over the nation screaming for Krispy Kreme donuts and what seemed like every Wall Street firm recommending KKD as a buy, Krispy Kreme looked poised to continue its exceptional growth.
Unfortunately, only 9 months later in May 2004, Krispy Kreme’s growth to stardom was quickly halted when it reported negative earnings followed by a SEC investigation on its accounting practices that will be discussed in this case study.
Table of Contents
Page 1..............................................................................................................................Cover Page
Page 2....................................................................................................................Table of Contents
Page 3...............................................................................................................About Krispy Kreme
Page 3......................................................................................................................Growth Strategy
Page 4......................................................................................................................Growth Strategy
Page 4………………………………………………………………………...….Accounting Flaws
Page