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Krispy Kreme Doughtnuts (KKD). Matt Pregozen. Krispy Kreme Recommendation. Buy: Limit at $3.65 Sell: Limit at $4.35. Background. 1937- Vernon Rudolph bought secret yeast recipe from a French chef in New Orleans Expanded from local store to nation wide chain of stores
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KrispyKremeDoughtnuts (KKD) Matt Pregozen
Krispy Kreme Recommendation • Buy: Limit at $3.65 • Sell: Limit at $4.35
Background • 1937- 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 countries • 93 company owned and 430 franchisees • 2,700 full time employees Source: http://finance.yahoo.com/q/pr?s=KKDhttp://www.krispykreme.com/history.html
Business Operations • Retailer and Wholesaler of Doughnuts and Sweets • 20 varieties of doughnuts (packaged and unpackaged) • Sells own brand of coffee • Sells equipment and supplies to franchises • Have donut fundraisers with youth groups Source: http://finance.yahoo.com/q/pr?s=KKD
Retail • Standalone store with seating • Makes donuts fresh in store Source: http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=KKD
Wholesale • Sold 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 Numbers • Current Price: $4.21 • P/E Ratio: N/A • Beta: 1.86 • EPS: -$0.01 • 52-Week Low: $1.34 • 52-Week High: $4.75 • Market Cap: $256.94M • Institutional Ownership: 29% As of 3/18/2010 from Google Finance
1 Month Yahoo Finance: http://finance.yahoo.com/echarts
3 Month Yahoo Finance: http://finance.yahoo.com/echarts
6 Month Yahoo Finance: http://finance.yahoo.com/echarts
KKD (Blue) vs Starbucks (Red) vs Tim Hortons (Green) Yahoo Finance: http://finance.yahoo.com/echarts
Competitors • Dunkin 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 Responsibility • Gave 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 Buy • Job market is recovering = doughnuts and coffee at office • Rumor that Wendy’s will buy Krispy Kreme • In the middle of restructuring, so future has potential • Upcoming Earnings Report 3/29/2010 Source: 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 Research) • Original Glazed Donut Taste Test
Quote “Donuts. Is there anything they can’t do?” -Homer Simpson