Krispy Kreme stands pat amid bad press

WINSTON-SALEM, NC: Confronting its worst publicity in the four years since it went public, Krispy Kreme, the fried doughnut-maker from the South, is circling its company wagons by staying on message and ignoring bad press.

WINSTON-SALEM, NC: Confronting its worst publicity in the four years since it went public, Krispy Kreme, the fried doughnut-maker from the South, is circling its company wagons by staying on message and ignoring bad press.

Winston-Salem, NC-based Krispy Kreme has LaForce & Stevens as its AOR, and it regularly uses Robinson Lerer Montgomery on projects. Neither PR agency, though, has been called to counter investor lawsuits and the company's first-ever reduced profit estimate.

"With the current events going on, we're really not doing anything differently than we do," said Amy Hughes, Krispy Kreme's corporate communications director. "We're just continuing to be consistent in our story. We've got a great brand."

Krispy Kreme announced May 7 that it was cutting its profit estimates by 10%. The fallout was immediate: Its stock price dropped 34% in less than 10 business days, and shares once hovering deliciously around $50 now dance just above $20.

Then came the shareholder lawsuits filed in North Carolina. Following the announcement and the lawsuits, the media threw a pun-heavy field day at its expense. "The doughnut turns at Krispy Kreme," blared BusinessWeek. "Krispy Kreme making less dough," quipped The Salt Lake Tribune.

The lawsuits charge that Krispy Kreme expanded too quickly and that its wholesale business undermined sales at its retail stores. The low-carbohydrate diet craze gripping the nation also contributed to the doughnut maker's decline, according to the lawsuits. First, Krispy Kreme underestimated the effect of the low-carb craze and then blamed it too much for its sinking profit estimates.

The company has stood by its low-carb claim and plans to continue to expand, Hughes said.

Krispy Kreme, founded in 1937, now has 370 stores in 44 states and four countries.

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