Novice Investing - Dreary Doughnot Hole

Date: Tuesday 13th 2008f May 2008 07:27:07 AM

Dreary Doughnot Hole - 04/18/2006

By: Novice Investing Staff

Wow. The hole is getting bigger and bigger at Krispy Kreme Doughnuts (KKD). This is one of our stock to avoid thus far. Previous management has run this company to the ground by aggressive expansion. Debt is sky high and cash is low. That was in 2004, the last time it disclosed its financial report to public.

On Monday 17th April 2006, Krispy Kreme reported that revenue for the first quarter of 2006 is down 20% to $ 120 Million, compared with last year at $ 162 Million. Revenue for the year was also expected to be down 20% to about $ 540 Million. What is wrong here? In particular, there is nothing new regarding this development. Krispy Kreme had been struggling and nobody would have thought that things are going to get better soon. Furthermore, as it cut down the number of stores, revenue figure is bound to come down.

With this announcement, the company also reveals that it will delay filing its annual report. Yawn. What else is new? Management is relatively new and we feel that we need to give them quite some time to clear this mess out. Nothing new in the horizon. It is just too speculative of an investment at this point. The stock price, however, has risen close to 50% from its low of $ 5 a couple of years ago. Investors seem to have faith in current management and we will see if they can deliver on their next earning report.



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Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding Krispy Kreme Doughnuts Inc. (KKD) or any other securities.

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