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Class Action Suit Filed Against Krispy Kreme Doughnuts
PHILADELPHIA -- The law firm of Spector, Roseman & Kodroff P.C. has filed a securities class action lawsuit against Krispy Kreme Doughnuts Inc. in the United States District Court for the Middle District of North Carolina.Also named in the lawsuit are company President, Chief Executive Officer and Chairman Scott Livengood, Chief Financial Officer Michael Phalen, former CFO Randy S. Casstevens and Chief Operating Officer John Tate. The lawsuit was filed on behalf of all purchasers of the common stock of Krispy Kreme between Aug. 21, 2003, through May 7.The complaint alleges that defendants violated the federal securities laws by issuing materially false and misleading statements contained in press releases and filings with the Securities and Exchange Commission during the above period. Specifically, it is alleged that Krispy Kreme defendants failed to disclose and misrepresented a number material adverse facts which were known to them, including:The company used aggressive bookkeeping to boost its earnings when it acquired its Michigan franchise in 2003Krispy Kreme's core businesses were actually underperformingThe company expanded too quickly, and now is forced to shut down six factory stores and three Doughnut and Coffee shops in an effort to improve productivityThe company's future strategic development plans with respect to Montana Mills were flawed, since Krispy Kreme recently announced plans to divest the Montana Mills operations in order to focus on its core businessThe company stands to face stiff competition from Dunkin' Donuts, which sells high-quality coffee and a more diverse line of breakfast foods than Krispy KremeOn May 7, Krispy Kreme announced that it expects fiscal 2005 diluted earnings per share from continuing operations, excluding certain charges, to be 10% lower than previously announced guidance (read story). As a result of this disclosure, shares of Krispy Kreme fell $9.29 per share on that date, closing at $22.51 per share.Individuals who purchased Krispy Kreme securities during the above-mentioned period can move to be appointed as a lead plaintiff in the class action lawsuit from now until July 12. Investors who have sustained substantial losses during the period are invited to contact the law firm for more information. Investors with relatively small losses are protected by the lead plaintiffs and do not need to take any action now, according to plaintiff's counsel Robert M. Roseman.Spector, Roseman & Kodroff concentrates its practice in complex litigation including actions dealing with securities laws, antitrust, contract and commercial claims.To join the class action lawsuit, visit: www.srk-law.com/dbjoinaclassaction.asp"