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Financial Statement Analysis: Krispy Kreme

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Financial Statement Analysis

Case Analysis: Krispy Kreme Doughnuts

1. Analysts are predicting that Krispy Kreme will be able to perform highly effectively and continue to grow rapidly in the coming two years. What are the key factors underlying the growth (at least 2)? Do you agree with their analysis? What are some potential concerns (at least 2)?

Analysts are predicting that Krispy Kreme will be able to perform highly effectively and continue to grow rapidly in the upcoming two years. Several factors can be the result of this rapid growth. Krispy Kreme’s brand is based on high quality products. They continue to excel in their field of providing top quality doughnuts to satisfy the needs of the consumer. Furthermore the fact that competition is fragmented with less brand recognition, this places Krispy Kreme up there, making it a leader in it’s industry. Krispy Kreme also carries strong and sold opportunities to expand their network of stores geographically. Having shops located in different regions and areas, makes the shop easily accessible to its consumers. The more Krispy Kreme stores found out there, the higher the profit margin is for the corporation with increased sales and thus greater revenue being generated. Just like Starbucks for example, one can clearly see how they’ve successfully expanded geographically with shops found on the corner of every street. This increases the accessibility to consumers, as well as the company’s overall corporate image. When walking down the street and seeing multiple Krispy Kreme signs, one will eventually want to enter the store and purchase something just for the sake of satisfying their own intrinsic needs. The fact that it’s a small store with new innovative technology, gives the company the competitive advantage it needs on top of other stores in order to beat their competitors.

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