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Krispy Kreme Doughnuts, Inc. Message Board

  • undervalued_investments undervalued_investments Sep 12, 2006 7:46 AM Flag

    Question for the shorts

    When will you admit defeat? Do you need to wait until next quarter when the company will report profits? Do you need to wait until the stock price is well above $10 next year?

    What signs would you take as confirmation that shorting KKD is over and you need to move somewhere else?? I am being serious.

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    • ><<Otherwise, what is the holdup?>>

      >-no penalties in bk
      >-going dark costs money and reduces real estate value and a bunch of other stuff
      >-read the blog, i learned a lot of that from the blogger

      You did not answer what I asked. If bk has several advantages to KKD's present situation, why this hasn't happened? They do not need to shut down stores indiscriminally, even during bk.

      ><<Deceptive maybe, but then how can you explain that revenues where almost the same as the previous Q, given that now they have fewer stores?>>

      >KKD only closed Ohio in Q2, franchisees other than Tampa and GCFF closed a lot in Q3, not Q2.
      Total store count was reduced by at least 10 stores in Q2. And then you have the humid, hot summer, that apparently did not have much effect n the customers. That was good!

      ><<So what? This is now 6 years old. But most importantly, companies can experience a RADICAL change when they go public. >>

      >yes they do.
      -fraud
      -lying to franchisees
      -lying to shareholders
      -more stock option expense
      -acquiring monatan mills and writing it off a year later
      -buying out friends' franchisees at 13mm per store
      -unprofitable wholesale expansion.
      -pisssing off creditors, levering up at now, LIBOR+725.

      I agree with all of that, BUT, hopefully all of that has been cleaned with the super team Cooper-Brewster. So you are talking about the past my friend.

      >Yes companies do change after IPOs. the poor f***ing company was so healthy and beautiful since 1937 and within 6 years (or 11 years if you believe di_vur's theory of the 1994 plan) it was brought down to its knees, to almost bankrupt in Feb 2005. Will it survive, maybe maybe not. But don't you come here and lecture us on how KKD benefited from the IPO. You only make yourself look like a clown.

      I thought we were having a rational discussion with no name calling or people getting upset.
      What I meant to say is that when a company goes public, its whole financial strategy changes. They now have to worry about producing results every 3 months, not every year. This can be good and bad... In the case of Krispy, this was bad because in the first quaretrs after goig public that had to always worry about beating the street. I am sure some of what they did was unethical/fraudulent, but that was the past!!

    • http://images.videonewswire.com/21917/27309/slide38.jpg My favorite link. The Blogger talked about his bankers forcing him to close La Habra after 7 years of operation. It seems like a sure thing that more closures will be happening on a regular basis.

    • Wow. I'm curious. How can going public improve KKD's margins? It's a balance sheet event, not an income statement event. Do you really think that people say, oh, Krispy Kreme is now public, I should pay more for their donuts?!?
      =======================

      YOU should pay $2 for each of YOUR donuts. Better yet, they should ban you, like that soup guy in Seinfeld- "NO DONUTS FOR YOU!!!!!!!!" HAHAHAHA!!!

      Ever hear of a) a company expanding after going public, then b) buying supplies in larger volumes at better pricing?? Ergo, margins go UP! That's ECON 101.

    • "But don't you come here and lecture us on how KKD benefited from the IPO. You only make yourself look like a clown."
      ------

      HAHAHAHAHA!!! Testy, testy. You sound like someone's mother! I can see you now standing there with your apron on, hands on hips, shaking your finger at undervalued!!! HAHAHAHAHAHA!!!!!!

    • <<Otherwise, what is the holdup?>>

      -no penalties in bk
      -going dark costs money and reduces real estate value and a bunch of other stuff
      -read the blog, i learned a lot of that from the blogger

      <<Deceptive maybe, but then how can you explain that revenues where almost the same as the previous Q, given that now they have fewer stores?>>

      KKD only closed Ohio in Q2, franchisees other than Tampa and GCFF closed a lot in Q3, not Q2.

      <<So what? This is now 6 years old. But most importantly, companies can experience a RADICAL change when they go public. >>

      yes they do.
      -fraud
      -lying to franchisees
      -lying to shareholders
      -more stock option expense
      -acquiring monatan mills and writing it off a year later
      -buying out friends' franchisees at 13mm per store
      -unprofitable wholesale expansion.
      -pisssing off creditors, levering up at now, LIBOR+725.

      Yes companies do change after IPOs. the poor f***ing company was so healthy and beautiful since 1937 and within 6 years (or 11 years if you believe di_vur's theory of the 1994 plan) it was brought down to its knees, to almost bankrupt in Feb 2005. Will it survive, maybe maybe not. But don't you come here and lecture us on how KKD benefited from the IPO. You only make yourself look like a clown.

    • <<So what? This is now 6 years old. But most importantly, companies can experience a RADICAL change when they go public. Sometimes goin public makes them better (usually), but sometimes worse. I believe KKD's margins must now be much higher than before they were public.>>

      Wow. I'm curious. How can going public improve KKD's margins? It's a balance sheet event, not an income statement event. Do you really think that people say, oh, Krispy Kreme is now public, I should pay more for their donuts?!?

      The temporary demand created when opening a new store had nothing to do with their IPO, it was just southern expats yearning for a taste from their past. And based on sales after these stores were open more than a few months, that's all it was.

      KKD operates a low margin business, it always has. That's the mistake the investor in the BW article makes. He assumes price to sales ratios for should be similar for healthy restaurants with strong margins, but KKD isn't healthy and will never have strong margins. How that business is financed isn't going to change it's margins.

    • undervalued_investments undervalued_investments Sep 13, 2006 12:05 PM Flag

      >eexactly, they will stabilise, after they close unprofitable owend and unsustainable franchise storre,s and then they'll make some profit, but How much. thats the question, and can this be done without bk. another question.

      They have already closed a bunch of company stores, but very, very few recently. I see this as a sign that they are done closing the bad stores. Otherwise, what is the holdup?

      ><<Agreed. But at least with company stores, they may be becoming more valuable, since the AVERAGE store reported an increase in sales (that is, considering only the remaining stores).>>

      >lol. you are falling in the same trap that class action claimants are. as the blogger says, these figures are deceptive.

      Deceptive maybe, but then how can you explain that revenues where almost the same as the previous Q, given that now they have fewer stores?

      >http://www.sec.gov/Archives/edgar/data/1100270/000095 014401001578/g65588a3s-1a.txt

      >this is the S-1 from 6 years ago, that's what you file when you do an IPO. Search <Page> 20 on the left side, you will find a huge table with KKD's results from 1996-2000, and the related discussion. These company-owned stores are the old stores. And the new stores? well, as everyone pretty much agrees, they are worse than the old stores.

      So what? This is now 6 years old. But most importantly, companies can experience a RADICAL change when they go public. Sometimes goin public makes them better (usually), but sometimes worse. I believe KKD's margins must now be much higher than before they were public.

      <<My mistake. I meant to say, closing stores for the past 3 months? >>

      >I know I said this before, but bro, you have to read:
      - the S1 from the IPO
      - the SC report 08/10/2005
      - the New loan from April 2005
      - the 10K from April 2006

      I do have read some of the above docs.

    • <<NOT... yet.>>

      eexactly, they will stabilise, after they close unprofitable owend and unsustainable franchise storre,s and then they'll make some profit, but How much. thats the question, and can this be done without bk. another question.

      <<Agreed. But at least with company stores, they may be becoming more valuable, since the AVERAGE store reported an increase in sales (that is, considering only the remaining stores).>>

      lol. you are falling in the same trap that class action claimants are. as the blogger says, these figures are deceptive.

      Ok let's try something else: see this:?

      http://www.sec.gov/Archives/edgar/data/1100270/000095014401001578/g65588a3s-1a.txt

      this is the S-1 from 6 years ago, that's what you file when you do an IPO. Search <Page> 20 on the left side, you will find a huge table with KKD's results from 1996-2000, and the related discussion. These company-owned stores are the old stores. And the new stores? well, as everyone pretty much agrees, they are worse than the old stores.

      <<My mistake. I meant to say, closing stores for the past 3 months? >>

      no, I'm sorry, at this point you're gonna have to follow the discussion and take notes, i won't compile such a list for you.

      I know I said this before, but bro, you have to read:
      - the S1 from the IPO
      - the SC report 08/10/2005
      - the New loan from April 2005
      - the 10K from April 2006

      you just have to read these. if you want to be a good successful investor it takes a lot of work sometimes, especially (and this should be obvious) with a company that is not disclosing almost anything.

    • >i agree 100%. But.. get this: they are NOT profitable.

      NOT... yet.

      >ok, let me again pinpoint it. it's not about lack of the collateral, it's about PERCEPTION of DECLINING value of collateral. (i.e. lenders percieve they hold a hot potato). It's not about the value, it's about the change in value.

      Agreed. But at least with company stores, they may be becoming more valuable, since the AVERAGE store reported an increase in sales (that is, considering only the remaining stores).

      >again, you are confusing things. shorts are NOT arguing that KKD is going to collapse and die. We mostly believe that there will be a smaller a healthy core, but we believe that chapter 11 could make KKd EVEN healthier by cleansing it of liabilities, and we believe that shareholders do not
      So again, why wait so long to make this company healthier thru chap 11 cleaning? If you can make it profitable faster w ch. 11, why wait??

      > deserve to own 500mm worth of this company, but rather, approximately 0. the real owners are:
      a) lenders
      b) class action claimants
      c) a source of new financing to expand

      a) and c) may be the same one.

      <<Tell me, aside from Rigel, how many others have been closing stores consistently>>

      >Rigel hasn't "been" closing. they shut the whole thing down. who's ben closing? ok let me actually be an idiot an answer that for you: GCFF, ST, WD, FR, GI, NED, KremeKo, Lone Star, DD, even GS did, KKNY, Gulf Florida Doughnuts... oh ya, Amazing Glazed also. ok do you really want me to go on? basically, everybody except international and KremeWorks and associates has closed some stores.

      My mistake. I meant to say, closing stores for the past 3 months? GCFF closed a few, maybe Tampa, (and Rigel of course), but aside from that, who? And there are some franchisees, like KKSF, which have closed ZERO stores.

      ><<And again, we have not seen mnay company stores closing.>>

      >why would u wanna close them so fast? look whathappens when you close 'em! 12 stores have been on Hilco for a year. They don't freakin' sell! They're sitting on that databse like a tree in my backyard. so why close the store? As for leases, maybe waiting for bk, maybe not, i don't know.

      Good point. But that also tells me there are no more stores doing terribly bad.

      >And secondly, once again, I agree that they are a bit more stable than a year ago and I am happy to see them solve

      Thank you.

      >contigent liabilities, lawusits etc, and hire this Blixt dude, because to me, this only brings closer the day that shareholders realize that this company does not belong to them.

    • Davey sees this completely.
      I need just a little bit more enthusiasm!

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