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SEC investigation, Doughnuts, Atkins Diet, South Beach Diet, Cholesterol, Stocks, Profit, Business
Published on October 9, 2004 By joeKnowledge In Business
SOURCE: FORBES

Krispy Kreme's Sticky Situation
Elizabeth MacDonald, 10.08.04, 1:25 PM ET

NEW YORK - Krispy Kreme Doughnuts announced that the U.S. Securities and Exchange Commission notified it yesterday that it is investigating the company, without specifying any further details.

The SEC had already opened up an informal inquiry in July into Winston-Salem, N.C.-based Krispy (nyse: KKD - news - people ), famous for its sugary doughnuts. Krispy Chief Operating Officer John Tate left the company in August "to pursue another opportunity," two weeks after the SEC opened its informal inquiry. Krispy shares were down slightly at midday to $12.58 from their $13.07 close yesterday.

The government inquiry comes on top of Krispy's problems with poor profits, as it has been struggling with dismal earnings of late. That's due in part to Atkins and South Beach diet lovers, who shun Krispy's confections, fearing they'll knock their cholesterol to the moon.

The government reportedly is concerned about not only Krispy's lowered earnings guidance but also the way it buys...




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