| Company: | Krispy Kreme Doughnuts, Inc. |
| Ticker Symbol: | NYSE:KKD |
| Class Period: | August 21, 2003 and May 7, 2004 |
| Court: | Middle District, NC |
| Date Filed: | May-14-04 |
| Lead Plaintiff Deadline: | Jul-11-04 |
| Allegations: |
A class action lawsuit has been filed in the United
States District Court for the Middle District of North Carolina on behalf of
purchasers of Krispy Kreme Doughnuts, Inc. (NYSE: KKD) ("Krispy Kreme" or the
"Company") publicly traded securities during the period between
August 21, 2003 and May 7, 2004, inclusive (the "Class Period").
The complaint charges that Krispy Kreme, Randy S. Casstevens, Scott Livengood, Michael Phalen, and John Tate, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between August 21, 2003 and May 7, 2004, about the Company's financial condition thereby artificially inflating the price of Krispy Kreme's stock.
More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Krispy Kreme's core businesses, despite the Company's unprecedented growth, actually underperformed because the Company's wholesale business is costly to operate, the wholesale business is also undermining the company's retail operations, by offering doughnuts of inferior quality to the doughnuts customers could get in a store and the Company's factory stores, and because the Company's factory stores are expensive and uneconomical in smaller markets; (2) that the Company expanded too quickly, and would now be forced to shut down six factory stores and three Doughnut and Coffee shops in an effort to improve productivity; (3) that the Company's future strategic development plans with respect to Montana Mills were flawed, as the Company now plans to divest the Montana Mills operations in order to focus on its core business; (4) that the Company would face stiff competition from the more ubiquitous Dunkin' Donuts, which sells high-quality coffee and a more diverse line of breakfast foods than Krispy Kreme; (5) that the Company ineptly accounted for how their bottom line would be affected by the popular low-carbohydrate diets; first by claiming that the trend would have no influence, and then by over-exaggerating the effect of the diet fad; (6) that, as a result of the foregoing, defendants lacked a reasonable basis for their positive statements about the Company and their earnings projections.
On May 7, 2004, Krispy Kreme announced, based on recent category dynamics, it expects fiscal 2005 diluted earnings per share from continuing operations, excluding certain charges, to be 10% lower than previously announced guidance. News of this shocked the market. Shares of Krispy Kreme fell $9.29 per share or 29.21 percent on May 7, 2004 to close at $22.51 per share.
If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.
The complaint charges that Krispy Kreme, Randy S. Casstevens, Scott Livengood, Michael Phalen, and John Tate, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between August 21, 2003 and May 7, 2004, about the Company's financial condition thereby artificially inflating the price of Krispy Kreme's stock.
More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Krispy Kreme's core businesses, despite the Company's unprecedented growth, actually underperformed because the Company's wholesale business is costly to operate, the wholesale business is also undermining the company's retail operations, by offering doughnuts of inferior quality to the doughnuts customers could get in a store and the Company's factory stores, and because the Company's factory stores are expensive and uneconomical in smaller markets; (2) that the Company expanded too quickly, and would now be forced to shut down six factory stores and three Doughnut and Coffee shops in an effort to improve productivity; (3) that the Company's future strategic development plans with respect to Montana Mills were flawed, as the Company now plans to divest the Montana Mills operations in order to focus on its core business; (4) that the Company would face stiff competition from the more ubiquitous Dunkin' Donuts, which sells high-quality coffee and a more diverse line of breakfast foods than Krispy Kreme; (5) that the Company ineptly accounted for how their bottom line would be affected by the popular low-carbohydrate diets; first by claiming that the trend would have no influence, and then by over-exaggerating the effect of the diet fad; (6) that, as a result of the foregoing, defendants lacked a reasonable basis for their positive statements about the Company and their earnings projections.
On May 7, 2004, Krispy Kreme announced, based on recent category dynamics, it expects fiscal 2005 diluted earnings per share from continuing operations, excluding certain charges, to be 10% lower than previously announced guidance. News of this shocked the market. Shares of Krispy Kreme fell $9.29 per share or 29.21 percent on May 7, 2004 to close at $22.51 per share.
If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.
If you feel you qualify for damages or remedies that might be awarded in this class action please fill in our form on the right to submit your complaint.
If your injustice does not match the complaint described above, please use this form to register your complaint. Thank you.
