Krispy Kreme Grows up!

stubeeef

macrumors 68030
Original poster
Aug 10, 2004
2,702
2
KK finally got rid of their cancer, Scott Livengood their X CEO/President/ and COB got canned !

I used to work for the company, I left in 2001 because it was intolerable, and Mr Scotty boy was high on the list of ego maniacs. It also turns out there has been lots of hanky panky in the top offices.

Anyway now that he has all but bankrupted the company, he can leave with his millions while the common hardworking good local types at KK hope to keep their jobs to pay the mortgage!

The incoming "cleanup" crew is also the group "cleaning up" the likes of Enron, and federated. When this group comes in it all but guarantees a bankruptcy filing. So the ole golden barge (20million dollar Falcon 900) to fly scotty boy about is on the sales floor as well as the common mans lear 60 (7-8 million dollar jet). Some or all pilots can expect to lose their jobs soon, unless they get lucky.

Mr livengoods riegn was like a mini enron, worldcom, money for his friends and family and screw the investor. Piece of work! Good riddens!
 

jsw

Moderator emeritus
Mar 16, 2004
22,819
41
Andover, MA
I'm glad to see him go, sorry to see the probable effects on the regular workers there. KK was hot, hot, hot and just blew it. KK donuts in the grocery store? Insane. Their appeal - their only strong appeal - was the ability to get them fresh off the conveyor (and man, they are still tasty then). Branching out killed them. Honestly, they weren't that good at all two days later after buying them at a fundraiser or at the store - or probably even 20 minutes after being made.
 

stubeeef

macrumors 68030
Original poster
Aug 10, 2004
2,702
2
It was funny, when they went public (yes I got the stock at $21/share before the 2 splits) I was like a celebrity as one of the pilots. It was fun. But the success of things had these guys duped in to thinking they had invented business, franchising, and doughnuts. Their heads blew off. Livengood dumped his wife and kids for one of the executives/officers of the company, she gave up her daughter and paid her x $1 million to say goodbye.

Then these guys/gals would drive a 2 tenths of a mile just to park in front of the airplane! Now I was not just a luggage monkey, but also a valet parker. I would be running like crazy on each stop to wash out the wine glasses!!!!! It was unbelievable. After I left they got a huge falcon 900 to fly to asia with at 3k per hour ++, had a nearly 5 million dollar a year flight department, but profits weren't 20mil a yr! DUHH!

The shame is the local hard working stiffs that have gotten jobs there while being laid off from the textile and furniture industry here, and are now asking themselves what can happen next. It is a real shame.

KK was similar to Apple, they had awesome branding, a unique hard to find product that you paid a premium for. Now they are cold sugar dough at the gas station. It will be a classic study at every good biz and marketing school.
 

Sun Baked

macrumors G5
May 19, 2002
14,874
57
Lesson of the old Boston Market, Rally's, Enron, etc.

When the stock is rocket ship hot, don't stick around too long.

Especially if the revenue growth is fueled soley by expansion.

It cannot be sustained, and the only bet you can make on the stock is whether they will file bankruptcy or land the thing before the debt catches up to them.

---

People told me the thing was like Harley, and I kept telling them is smelled like chicken/burgers (Boston Market/Rally's.)

There used to be cleanup crews that specialized in reducing debt and bringing companies back to health, but these days it seems like they just part the corpse out.

Boston Market was saved by McDonald's, in the Phoenix valley only one Rally's remains open.

KK may file bankruptcy and get rid of all the stockholders and be taken over by the bondholders -- all depends on what type of rat's nest the previous management was hiding.

Hopefully they didn't play shell games with the debt load.
 

Chip NoVaMac

macrumors G3
Dec 25, 2003
8,889
25
Northern Virginia
jsw said:
I'm glad to see him go, sorry to see the probable effects on the regular workers there. KK was hot, hot, hot and just blew it. KK donuts in the grocery store? Insane. Their appeal - their only strong appeal - was the ability to get them fresh off the conveyor (and man, they are still tasty then). Branching out killed them. Honestly, they weren't that good at all two days later after buying them at a fundraiser or at the store - or probably even 20 minutes after being made.
Amen to warm KK's.

Though it brings back bitter sweet memories for me. Haven't had much opportunity (and sad to say the desire) after 9-11. For a few months or so before 9-11 I sat in my suite at the Millennium Hilton looking down on the workers going to work with warm KK's by my side. Sure I bought some at the grocery store, but not the same when they are warm.
 

Chip NoVaMac

macrumors G3
Dec 25, 2003
8,889
25
Northern Virginia
stubeeef said:
It was funny, when they went public (yes I got the stock at $21/share before the 2 splits) I was like a celebrity as one of the pilots. It was fun. But the success of things had these guys duped in to thinking they had invented business, franchising, and doughnuts. Their heads blew off. Livengood dumped his wife and kids for one of the board members, she gave up her daughter and paid her x $1 million to say goodbye.

Then these guys/gals would drive a 2 tenths of a mile just to park in front of the airplane! Now I was not just a luggage monkey, but also a valet parker. I would be running like crazy on each stop to wash out the wine glasses!!!!! It was unbelievable. After I left they got a huge falcon 900 to fly to asia with at 3k per hour ++, had a nearly 5 million dollar a year flight department, but profits weren't 20mil a yr! DUHH!

The shame is the local hard working stiffs that have gotten jobs there while being laid off from the textile and furniture industry here, and are now asking themselves what can happen next. It is a real shame.

KK was similar to Apple, they had awesome branding, a unique hard to find product that you paid a premium for. Now they are cold sugar dough at the gas station. It will be a classic study at every good biz and marketing school.
Thanks for the insight. It shows the lack of responsibility of shareholders to hold the execs to the fire for real results.
 

Lyle

macrumors 68000
Jun 11, 2003
1,874
0
Madison, Alabama
Well, fine then. I'm now going to have to stop by Krispy Kreme on the way to work and pick up a dozen glazed. ;)

Our funny (to us) Krispy Kreme story is that when they started selling them at Harrod's Department Store (in London), it received some news coverage here in the U.S. So we were sitting there, watching the evening news of the crowd gathered at Harrod's to buy the first Krispy Kremes and there, right in the middle of things, was our sister-in-law with donut in hand. We called her up the next day to let her know she was an international celebrity. ;)
 

gwuMACaddict

macrumors 68040
Apr 21, 2003
3,124
0
washington dc
company was in a tough spot though, with all the low-carb diet crap... donuts dont do well in those type of diets.

they just opened a KK in dupont circle here in dc about a month ago. sooooooooo ymmy :D
 

wdlove

macrumors P6
Oct 20, 2002
16,570
0
evoluzione said:
Krispy Kremes are awesome, so much better than Dunkin Donuts.

soundslike a good thing that's happened, and i only hope they'll bounce back bigger and better than before.
Yes, they are delicious. My wife and I visited several months ago. When we walked into the store we got to sample a donut fresh and hot wright off the assembly line. We bought a sampler box, they were still good after warmed up in the microwave. It's nice to have a treat once in a while.

I just don't understand why a CEO that ruins a company gets a large severance package. Certainly no incentive fro a CEO to do well.
 

xsedrinam

macrumors 601
Oct 21, 2004
4,348
1
A family, close friends of ours, has a son who suffered an Aneurism in the brain and a near fatal stroke about 3 years ago. We all thought he was not going to make it. About two weeks after the crisis, their son, still in the hospital, head bandaged after two surgeries, only able to move his right hand, was conscious but that was about it. He couldn't speak but could nod his head that he could understand them. So they placed a writing pad in front of him, gave him a pen, and asked him to write down anything they could get him. They were still not certain if there had been severe brain damage along with motor damage, but held their breath as he grasped the pen in his right hand and slowly but deliberately penned two words on the pad. "Krispy Kreme". That was a happy moment for the whole family.

The son is finishing up his Sophomore year in HS this Spring and is once again, an Honor Student.
X
 

Lyle

macrumors 68000
Jun 11, 2003
1,874
0
Madison, Alabama
xsedrinam said:
A family, close friends of ours, has a son who suffered an Aneurism in the brain and a near fatal stroke about 3 years ago. We all thought he was not going to make it. About two weeks after the crisis, their son, still in the hospital, head bandaged after two surgeries, only able to move his right hand, was conscious but that was about it. He couldn't speak but could nod his head that he could understand them. So they placed a writing pad in front of him, gave him a pen, and asked him to write down anything they could get him. They were still not certain if there had been severe brain damage along with motor damage, but held their breath as he grasped the pen in his right hand and slowly but deliberately penned two words on the pad. "Krispy Kreme". That was a happy moment for the whole family.

The son is finishing up his Sophomore year in HS this Spring and is once again, an Honor Student.
Good grief. Don't you imagine that this family could get, like, a lifetime supply of Krispy Kreme donuts if that kid would make a commercial for them or something? ;)

P.S. All kidding aside, I'm glad to hear that he is doing so well now.
 

stubeeef

macrumors 68030
Original poster
Aug 10, 2004
2,702
2
xsedrinam said:
A family, close friends of ours, has a son who suffered an Aneurism in the brain and a near fatal stroke about 3 years ago. We all thought he was not going to make it. About two weeks after the crisis, their son, still in the hospital, head bandaged after two surgeries, only able to move his right hand, was conscious but that was about it. He couldn't speak but could nod his head that he could understand them. So they placed a writing pad in front of him, gave him a pen, and asked him to write down anything they could get him. They were still not certain if there had been severe brain damage along with motor damage, but held their breath as he grasped the pen in his right hand and slowly but deliberately penned two words on the pad. "Krispy Kreme". That was a happy moment for the whole family.

The son is finishing up his Sophomore year in HS this Spring and is once again, an Honor Student.
X
You ought to send that to KK!
 

xsedrinam

macrumors 601
Oct 21, 2004
4,348
1
stubeeef said:
You ought to send that to KK!
Didn't occur to me, but since there have been a couple of suggestions to do so, I sent it in to KK. I'll post any reply they might make.
X
 

Koodauw

macrumors 68040
Nov 17, 2003
3,936
165
Madison
It doesnt surprise me that Livengood is now gone. I never got caught up in the whole KK frenzy though. We have a family run Kosher doughnut shop by house. I much prefer to eat there. AND I DO!


mmmmmmmmmmmmmm......... doughnuts.
 

cb911

macrumors 601
Mar 12, 2002
4,119
3
BrisVegas, Australia
so KK isn't going out of business is it? :eek:

i haven't even had a chance to try one yet... they're only just making their way over to Australia, with only one store in Sydney now (with more planned). i did hear that they're going to be opening one in Brisbane, i really hope that still goes ahead. they sound like some damn tasty doughnuts, judging from all the hype i've heard. :D
 

stubeeef

macrumors 68030
Original poster
Aug 10, 2004
2,702
2
cb911 said:
so KK isn't going out of business is it? :eek:

i haven't even had a chance to try one yet... they're only just making their way over to Australia, with only one store in Sydney now (with more planned). i did hear that they're going to be opening one in Brisbane, i really hope that still goes ahead. they sound like some damn tasty doughnuts, judging from all the hype i've heard. :D
They won't go out of business, even Enron didn't, but expect Bankruptcy and scandal.
 

stubeeef

macrumors 68030
Original poster
Aug 10, 2004
2,702
2
Well it turns out that ole scotty boy (X ceo) got a sweetheart golden parachute to the tune of 6 million. and the stock is falling again to day. The company once had a market cap near 3 billion, is now in the 550 million range-a loss of 2.5 billion, at $4 per dozen that is 625 million dozen or 7.5 billion doughnuts.

I just read an article about the new acting ceo, and it turns out enron my be being dissolved afterall? This guy, cooper profited about 60mil on junking enron, so kk maybe out of one pot just to fall in the fire. I hope not for the employees sake.
 

Sun Baked

macrumors G5
May 19, 2002
14,874
57
stubeeef said:
I just read an article about the new acting ceo, and it turns out enron my be being dissolved afterall? This guy, cooper profited about 60mil on junking enron, so kk maybe out of one pot just to fall in the fire. I hope not for the employees sake.
The true turn around crews are few and far between...

They used to come in and pay down debt, and right the ship by slashing the bleeding units. All based on a lower revenue target before handing them off to somebody else. Of course this destroys the stock price for an extended period, especially the old rocket stocks.

Apple is a good example of this type of repair, and it's stock sucked for a long time.

But that doesn't goose the stock as much as fixing them just enough to sell them off to somebody else.

Not as profitable as parting them out.

Not as profitable "personally" as tossing a company into BK, and handing it over to the bondholder while ejecting all the shareholders. Some of these crews that do that get paid quite well.

Most of the "turn around crews" come in not to maximize the profit to the shareholders, but to maximize the return to the bondholders.
 

relimw

macrumors 6502a
May 6, 2004
611
0
SC
gwuMACaddict said:
company was in a tough spot though, with all the low-carb diet crap... donuts dont do well in those type of diets.
You've just got to get them before they go thru the glazer :)
Since finding out that I was diabetic, missing my weekly dose of KK has been horrible. At least by grapping them before they go thru the glazer, I shave off 70% of the sugar :)
 

stubeeef

macrumors 68030
Original poster
Aug 10, 2004
2,702
2
Well here is a little update on the cleanup.

Remember the ceo "retired" <read-booted> as he prepares for court battles (enron, worldcom, ....).

Well the cleanup crew that was lauding the cash flow is saying they are short of cash and has sold 1 company jet for $30million ( a loss ) and now they are slashing the good ole folks jobs. I hope Livengood fries for this greed and deception.

glazed over link

Last month, Krispy Kreme averted defaulting on a $150 million credit facility after its lenders agreed to give it until March 25 to prepare its financial statements.

By that time, Krispy Kreme will need additional credit, the company said in a statement. But it said there can be no assurance it will reach an agreement with its banks or that it will secure such funding.

The Winston-Salem, North Carolina company is in the process of restating its 2004 financials due to errors in the way it accounted for repurchases of franchises. It therefore has been unable to file its most recent results with the U.S. Securities and Exchange Commission (news - web sites).

Krispy Kreme, suffering from sluggish sales of its signature doughnuts, also said it is cutting 25 percent of the jobs in its corporate, mix plant, equipment manufacturing and distribution facilities to save $7.4 million a year.
 

Sun Baked

macrumors G5
May 19, 2002
14,874
57
Low on cash, and has a rather amazingly low amount on-balance sheet amount of debt for a company that grew so quickly.

Should be interesting to see how responsible is for the debt of the franchisees, that get closed/go belly up.

Those off-balance sheet deals could end up being rather messy if KK is forced to recognize them -- they did keep a chunk of interest in some of these partnerships. All it will take is a bankruptcy or two of multi-store franchisees to make things interesting.

Remember Taco Hell and a couple other major chains ended up getting slammed because they were forced to taking back a huge number of franchises when their franchisees went belly-up. All because they oversaturated the number of stores in given cities (like KK eventually did).
 

stubeeef

macrumors 68030
Original poster
Aug 10, 2004
2,702
2
Sun Baked said:
Low on cash, and has a rather amazingly low amount on-balance sheet amount of debt for a company that grew so quickly.

Should be interesting to see how responsible is for the debt of the franchisees, that get closed/go belly up.

Those off-balance sheet deals could end up being rather messy if KK is forced to recognize them -- they did keep a chunk of interest in some of these partnerships. All it will take is a bankruptcy or two of multi-store franchisees to make things interesting.

Remember Taco Hell and a couple other major chains ended up getting slammed because they were forced to taking back a huge number of franchises when their franchisees went belly-up. All because they oversaturated the number of stores in given cities (like KK eventually did).

Good point! It just hurts to see so many good locals take it on the chin because of the greed of a few at the top. what makes it harder is that livengood will probably not even get a pimpslap over this.