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Krispy Kreme Doughnuts, Inc. Message Board

  • Mony_Maker Mony_Maker May 16, 2000 10:22 PM Flag

    How Can This Be?

    Krispy Kreme is a great company, just like
    perhaps another 1000 out there that have a fine product
    and are growing rapidly. But four times sales for a
    donut company? 100 times earnings? OK, so their
    customers are fanatics, and if this company was founded a
    couple of years ago maybe I could buy the story, but it
    seems to me that a company that has only grown to this
    pathetic size in 50 plus years may not be the rocket to
    success that people think. Relatively slow growth to this
    point, poor margins compared to its peers, and nice by
    not spectacular growth projected by the
    company.

    I wouldn't go long at this price for any reason,
    but the really scary thing is that weekly sales per
    unit and buildouts per unit have skyrocketed over the
    past five years. Yes, average sales per unit is a
    great thing to increase, but if you are getting it by
    building bigger and bigger units, you are entering a new
    market and opening yourself to more and more risk. Also,
    entering regions where your staying power is not proven
    and spending big bucks to do it is great if it pays
    off, not so great if it doesn't.

    Not long, not
    short but once the bubble breaks I'll be shorting this
    hard and heavy.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • 50 years of protected, private
      floundering.
      Now they have to answer to shareholders.
      The jig
      is up.

      But don't waste your breath trying to
      make logical arguments based on a realistic appraisal
      of the company's prospects. As long as the doughnuts
      are hot the fools will throw their money away on a
      hyper-extended share.

      I will remember this experience. I
      want to savor the delicious melting of the
      madness.

      The panic, as fools scramble like roaches to dump
      their shares will make me laugh.

      • 1 Reply to wavethreedown
      • Yes, this company has been floundering for 50
        years with middling success, but at cursory glance it
        looks like they have brought in a new management team
        and are making changes. Not that I am saying all is
        well mind you, but you just don't know. While the old
        money still has control, the young hotshots have some
        serious discretion to expand the business. Remember, if
        they hit on all cylinders the old money gets
        fabulously wealthy. And then there are possibilities like
        estate tax purposes or the fact their younger generation
        doesn't want to go into the business or for
        diversification purposes or whatever, they might want to bail
        either way. If they strike out, the old money knows
        first and sells to the Krispy Kreme faithful. Either
        way they win. Problem is, the rest of us have
        significantly less chance to make out like bandits.

        As
        for me, it is obvious that this boy is going down, at
        least in the short term, and going down hard. The only
        question is when. Once it starts, I'm going short. Big
        time.

 
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