Krispy Kreme doughnuts hit Thailand

KKD is climbing out of its hole after a stock crash and a rash of store closures a few years back.

By InvestorPlace Sep 29, 2010 10:03AM

Consumers in Thailand craving the signature taste of a hot, fresh Krispy Kreme (KKD) glazed doughnut will no longer have to suffer. The sweets shop announced today that it will open its first store in Thailand, in the center of Bangkok's business district. Company officials expect to open approximately 20 stores in Thailand over the next five years. 

 

The Thailand opening is part of a larger expansion, as just last month the company announced the construction of stores in the Dominican Republic. Krispy Kreme now offers its products in 22 countries and is showing signs of growth after a very steep and very public flop a few years ago.

Krispy Kreme's stock has had its share of both sweet and sour notes.  Founded in 1937, KKD found tremendous success in the 1990s and expanded at a torrid pace. The company's stock soared past $40 in 2003, and Krispy Kreme was  a major competitor to Dunkin' Donuts and intent on gobbling up market share.

The success did not last long, however, as the stock bottomed out around $5 in 2005. Some people claimed the store expanded too quickly, and as earnings dropped, store closures became the norm. Others people pointed to KKD's stale product line. Instead of offering a variety of breakfast options like its competitors or upscale coffee, Krispy Kreme just kept shoveling out glazed doughnuts. Post continues after video:

After several years of stagnant performance, Krispy Kreme stock seems to have regained some of its luster, however.  Year to date, KKD has gained 56.3%, and the stock outperformed earnings estimates by 3 cents last quarter. The $1.66 jump in stock price may not have shareholders jumping for joy, but after the doldrums of the mid-2000s, any good news is welcome.

Krispy Kreme has also been able to add a few wrinkles to its menu while still maintaining its signature simplicity. Various iced beverages have made their way onto the menu, and seasonal flavored doughnuts now compliment KKD's signature product. 


The chain's expansion has also certainly added to its recent success.

Perhaps KKD is learning from its mistakes. Adding 20 stores in Thailand over the next five years is very different from the hurried development that occurred last decade. If the doughnut maker continues to update its menu and expand conservatively, stockholders may be rewarded in the long run.


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