Krispy Kreme Stock Is Almost Here: What to Know About the DNUT IPO
Not long ago, a Krispy Kreme IPO was announced. But at the time, the filings were confidential. Now the company has made its filings public. And that means Krispy Kreme stock is right around the corner. So here’s everything you need to know about this opportunity.
Krispy Kreme Stock: The Business
Vernon Rudolph founded Krispy Kreme Doughnuts in 1937. Based in Winston-Salem, North Carolina, the doughnut franchise is known for its original glazed doughnuts and its famous “Hot Now” signs. Now the company’s doughnuts can be found in 12,000 grocery and retail stores across the U.S. and 1,400 shops in 33 countries.
Recently, Krispy Kreme opened its biggest location yet: Times Square. This is a 24/7 shop coming in at 4,500 square feet. According to the company, the shop is capable of producing 4,560 doughnuts every hour, including an exclusive “Big Apple” donut. Other features include a glazing waterfall and a doughnut-making theater with stadium seating.
Dunkin’ is the company’s largest competitor. It recently went private, pulling from the public markets. The company was acquired by Inspire Brands, the owner of Arby’s, for $8.76 billion. And in the wake of the transaction, Krispy Kreme announced a Krispy Kreme IPO. At the time, the filings were private. But now the filings are public for all to see. Let’s take a look…
According to the Krispy Kreme IPO filing, the company believes it has a strong position to take advantage of the global indulgence market. This market is estimated to be worth $650 billion.
On one hand, Krispy Kreme claims it developed a 94% aided awareness in its tracked markets. On the other hand, it also admits that a small portion of the global population has the geographic proximity to a Krispy Kreme store or retail partner.
Some analysts are wary of Krispy Kreme’s market, claiming trends are leaning more toward healthier lifestyles. But the doughnut maker is bullish on the indulgence market, saying the category is historically recession-resistant. It backs the claim up by providing data from the last two financial crises. The 2007 to 2009 crisis saw a 4% category growth. And the COVID-19 pandemic showed 4.3% year-over-year growth. So how does Krispy Kreme plan to tackle the growing market?
Emotional Connections With Local Communities
- Creating experiences. The company has Hot Light Theater Shops. When the shop’s “Hot Now” sign is on, the doughnuts are being freshly made and anyone can go watch. Additionally, the company uses seasonal products, such as holidays and events, to help people celebrate.
- Acts of Joy. The goal of these is for the company to create an emotional connection to its customers. Some examples include “Healthcare Monday” where Krispy Kreme offered unlimited doughnuts to healthcare workers in 2020 as a thank you. It gave 4.2 billion earned media impression and more than 1,800 media placements.
- Raise Dough for Your Cause. Krispy Kreme offers local community organization a way to raise money. Not only is the company able to be part of fundraising events, it also serves as an introduction and increases brand awareness.
The company also gave insight into its growth strategies ahead of the Krispy Kreme stock debut.
Krispy Kreme Stock: Growth Strategies
The first growth strategy listed is increasing trial and frequency. Like any company and industry, innovation is key. Krispy Kreme focuses on continuing to expand its offerings and delivering a high-quality indulgent experience. Additionally, it aims to link product launches with events that have meaning with communities and customers.
Another strategy is to expand its omni-channel network in both new and existing markets. Krispy Kreme uses a hub and spoke model, according to the IPO prospectus. The company admits that despite its brand awareness, it doesn’t have any significant presence in major U.S. markets and cities, such as Boston and Minneapolis. Krispy Kreme also identified markets outside of the U.S., including China, Brazil and part of Western Europe.
In the Krispy Kreme IPO prospectus, the company says it plans to grow its network in three ways. The first is to increase its physical presence. This includes Hot Light Theater and Fresh shops. The second is to focus on e-commerce and delivery, an option growing in popularity since the pandemic. Krispy Kreme aims to make its products easily accessible with options such as delivery, gifting, in-office catering and business solutions. And finally, the company will grow its third-party retail channel.
The last growth strategy listed involves Insomnia Cookies, a company Krispy Kreme took majority stake of in the last few years. The cookie company targets younger consumers, namely college students. It leverages an e-commerce platform, which created 54% of sales. The company added 17 new stores in 2020 and plans to add an additional 30 in 2021.
With these growth strategies in mind, let’s move on to an important section: the finances.
When it comes to Krispy Kreme stock, investors will note the company’s history in revenue growth. In 2018, the company reported total revenue of $795.9 million. It grew to $959.4 million in 2019 for a growth rate of 20.5%. And for 2020 (year ended January 3, 2021), total revenue increased to $1.122 billion. That’s a growth of about 16%.
However, the Krispy Kreme IPO prospectus shows the company isn’t making a profit. Instead, the company continues to report net losses attributable to Krispy Kreme, Inc. In 2018, this number was $14.1 million. That loss grew in 2019 to $37.4 million. And in 2020, the company’s attributable net loss was $64.3 million.
Additionally, Krispy Kreme’s balance sheet shows the company has $50.7 million in cash and equivalents as of April 4, 2021. But it also shows a working deficit of $328.9 million and debt of $1.205 billion. Under use of proceeds, the company states…
We intend to use the net proceeds that we receive from this offering to repay outstanding indebtedness under the revolving credit facility portion of our 2019 Credit Facility and the Related Party Notes, with the remainder to be used for general corporate purposes.
With all of this information in mind, let’s look at all of the revealed details for Krispy Kreme stock.
Krispy Kreme IPO Details
Krispy Kreme confidentially filed in early May 2021. And on June 1, the company made the documents public to investors. Although there is no confirmed Krispy Kreme IPO date, price range or offer shares, there are a couple of things investors do know.
The company filed for Krispy Kreme stock to trade on the Nasdaq under the ticker symbol DNUT. This is the same exchange Krispy Kreme traded on in its original 2000 IPO. And even though we don’t have a confirmed date, the SEC states confidential filings must be made public no later than 15 days before the IPO date. This means investors could expect the Krispy Kreme IPO as early as June 16, 2021.
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