Krispy Kreme Doughnuts

  1. Analysts are predicting that Krispy Kreme (KKD) will be able to perform highly effectively
    and continue to grow rapidly in the coming two years. Do you agree with their analysis? If so,
    why? It not, why not?
  2. What factors did the CIBC analyst examine to forecast sales growth for KKD in the years
    ended January 2003 and 2004? What assumptions did they implicitly make about number of new
    stores and weekly sales per store (for both company and franchise stores)? What are their
    implicit assumptions about revenue growth from franchise operations and KKM&D?
  3. Do you agree with these forecasts and assumptions?
  4. What are the NOPAT margins that the CIBC analysts have forecasted for KKD for the years
    ended January 2003 and 2004? What assumptions were made about specific expense items?
  5. Do you agree with these forecasts and assumptions?
  6. The CIBC analysts do not forecast KKD’s balance sheet for the following year (ended January
    2003). Make your own (condensed) balance sheet forecasts.
  7. In general, do you expect analysts’ forecasts for a company like KKD to be optimistic,
    pessimistic or unbiased? Why?

Sample Solution

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