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Krispy Kreme Korrupt (D'ough!)

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Krispy Kreme Korrupt (D'ough!)

Old 01-04-05, 10:21 AM
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Krispy Kreme Korrupt (D'ough!)

http://story.news.yahoo.com/news?tmp..._kreme_lawsuit

RALEIGH, N.C. - Krispy Kreme Doughnuts Inc. shares were down more than 5 percent in pre-market trading Tuesday after a new filing in a shareholder lawsuit against troubled company claimed the bakery products maker routinely padded sales by doubling shipments to wholesale customers at the end of fiscal quarters.

The charge, leveled by two unidentified "confidential witnesses" who are former employees of the company, is included in a recent filing in the lawsuit, which claims executives at the once high-flying doughnut maker knew sales were slowing by at least January 2003.

According to the lawsuit, the company's leaders executives hid that fact until May, when Krispy Kreme reported its first-ever quarterly loss.

That earnings report, which was followed by the revelation that the company was under investigation by the Securities and Exchange Commission (news - web sites), sent Krispy Kreme's stock into a tailspin; it dropped 66 percent in 2004. On Monday, the stock fell 32 cents, or 2.5 percent, to $12.28 in trading on the New York Stock Exchange (news - web sites).

In pre-market trading on Tuesday, its shares were down another 66 cents, or 5.4 percent, to $11.65.

Krispy Kreme did not immediately return a call Monday seeking comment on the allegations.

The latest charges are in a complaint filed Dec. 14 in federal court in Greensboro, where a judge has consolidated a number of shareholder lawsuits against the company.

The suit alleges that between January 2003 and last May, when Krispy Kreme issued a profit warning, "the company issued false and misleading statements, including false financial results" and "repeatedly ratcheted upward its public quarterly and fiscal year revenue and earning projections ... all in the face of slowing sales and market saturation."

At the same time, three top officers named in the lawsuit chief executive officer Scott Livengood, former chief operating officer John W. Tate and former chief financial officer Randy S. Casstevens "unloaded more than 475,000 shares of Krispy Kreme stock for proceeds of $19.8 million," the suit charges.

According to one witness cited, Krispy Kreme double-shipped wholesale customer orders at the end of quarters on four separate occasions while the witness worked for the company.

And a former sales manager at a Krispy Kreme plant in Ravenna, Ohio, said a regional manager ordered that customers be sent double orders on the last Friday and Saturday of the 2004 fiscal year, explaining "that Krispy Kreme wanted to boost the sales for the fiscal year in order to meet Wall Street projections." The witness said the manager explained that the doughnuts would be returned for credit the following week once fiscal 2005 was under way.

The witness "understood that it was commonplace at Krispy Kreme to channel stuff in order to meet Wall Street expectations," according to the complaint.

The plaintiffs in the case are seeking class-action status for investors who bought Krispy Kreme shares between January 2003 and last May. The suit seeks a jury trial and unspecified damages.

Krispy Kreme has blamed its problems on popularity of low-carbohydrate diets and high oil prices. But critics have argued that the company expanded too quickly and saturated its market by making its product available in grocery stores and convenience stores.
Old 01-04-05, 10:24 AM
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mmmm.......donuts
Old 01-04-05, 10:24 AM
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Omg Its Like A Cloud In Your Mouth And Anybody Who Says Differently Can **** My ***
Old 01-04-05, 10:31 AM
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What the heck? That was supposed to be in all-caps. I've been censored, mates!
Old 01-04-05, 10:45 AM
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i like the chocolate covered glaze ...... mmmmm
Old 01-04-05, 10:57 AM
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Originally Posted by Groucho
What the heck? That was supposed to be in all-caps. I've been censored, mates!
RABBIT77 TRIES TYPING IN ALL CAPS OMG WTF LOL
Old 01-04-05, 11:27 AM
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Sweet, sweet korruption.....
Old 01-04-05, 12:19 PM
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Powder korrupts. Powered Donuts korrupt absolutely.
Old 01-04-05, 12:44 PM
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I wonder how they manage a loss? The places always seem to be full, but I would agree that they should probably quit selling to quickie marts, etc. if they want their stand alone shops to survive.
Old 01-04-05, 01:11 PM
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Not only that but the ones sold at "quickie marts" aren't nearly as good, but cost the same as the ones you can pick hot off the conveyor belt.

I only bought krispy kremes at a non-standalone shop a couple times (back before I cut out the carbs) and I have to say I was disappointed both times.They were ok, but not nearly as good as the fresh ones.
Old 01-04-05, 01:16 PM
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Originally Posted by Billy Madison
I only bought krispy kremes at a non-standalone shop a couple times (back before I cut out the carbs)
They were right
Old 01-04-05, 01:42 PM
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Where's JustinS when you need him and the picture of the stain-glassed Krispy Kreme Jesus?
Old 01-04-05, 05:06 PM
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Good thread title.
Old 01-04-05, 06:05 PM
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when the first krispy kreme in the area opened up this way people went nuts over it, then the hype died down and the place just does normal amounts of business for a donut shop.
They're good donuts (much better than Dunkin) but I don't see what all the hype was about.
now if only they opened up a Chick Filet around here I could see if that place lives up to the hype.
Old 01-04-05, 06:13 PM
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good that they're getting busted
over rated over priced donuts
both tim hortons, and even the two bigger grocery store chains here are just as good
Old 01-04-05, 08:23 PM
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Interesting & sad. I've met Mack McAleer (one of the main executives of KK) on several occasions and he is really a great guy. His dad is the one who brought KK back from the dead in the 80's. Mack dates Lucy Buffett (Jimmy's sister). He and Lucy both live near me (separate homes). Lucy has a restaurant in Gulf Shores, AL called LuLu's.

It's really sad to see this occuring. They make a quality product and I hope that they work this travesty out. Unfortunately, too many corporations are "cooking" the books to keep afloat. Illegal activity such as this is shameful and the SEC should fine the hell out of them!

Sonic
Old 01-04-05, 08:55 PM
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I always thought making them available in grocery stores was a bad move... much like Alienware or Gateway selling their pcs in retail chain stores.
Old 01-04-05, 10:08 PM
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I didn't really like their doughnuts anyway. I didn't see what all the fuss was about, really.
Old 01-04-05, 10:22 PM
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Originally Posted by mikehunt
good that they're getting busted
over rated over priced donuts
both tim hortons, and even the two bigger grocery store chains here are just as good
So I'm paying too much for donuts I shouldn't like?

Glad you were here to straighten me out.
Old 01-04-05, 10:25 PM
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Originally Posted by nickdawgy
I didn't really like their doughnuts anyway. I didn't see what all the fuss was about, really.
there's always at least one guy to say this in every Krispy Kreme thread... fitting it should come from "that annoying guy"
Old 01-04-05, 10:34 PM
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I've had Krispy Kreme twice. They tasted like any other dounut I've ever had. I don't get it.



Stew
Old 01-04-05, 11:06 PM
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Best donuts I ever had were made by the Mayor of Mt. Washington, Kentucky before he retired. Back when I wore a younger mans clothes a coworker and I would split a dozen every morning, like having heaven in your mouth.
Old 01-04-05, 11:07 PM
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where is Myster X?
Old 01-05-05, 01:54 AM
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the 10 pounds i need to lose say they have no problems here
Old 01-05-05, 02:31 AM
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I can't eat these donuts any more. Way too sweet for me.

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