Krispy Kreme IPO To Price As Doughnut Chain Eyes Post-Pandemic Indulgence Wave

The Krispy Kreme IPO will price later today with the doughnut chain’s shares trading tomorrow, marking its stock-market return after going private several years ago.


The timing of the pricing of the Krispy Kreme IPO, first reported elsewhere, comes as the company seeks to pay back debt, buy back stock, and capitalize on what it characterized as recession-proof indulgence after the stress of the coronavirus pandemic.

Krispy Kreme, in a prospectus filed this month, said it would offer 26.7 million shares, with an expected range of $21 to $24 per share. The company could raise as much as $640 million via the IPO, with a valuation of around $4 billion.

Krispy Kreme also said it granted the underwriters a 30-day option to buy an extra 4 million shares of its common stock. Shares will trade on the Nasdaq Global Select Market under the ticker “DNUT.”

JPMorgan, Morgan Stanley, BofA Securities and Citigroup were the lead book-running managers of the Krispy Kreme IPO.

For its most recent quarter, which ended April 4, Krispy Kreme’s revenue jumped 23% to $321.8 million. Its net loss narrowed to $378,000. The company’s total debt stood at around $1.2 billion at that time.

For fiscal 2020, Krispy Kreme generated around $1.1 billion in net sales, up 17%. It lost $60.9 million over that time.

Krispy Kreme was bought in 2016 by the European investment fund JAB Holding for $1.35 billion. That move took the chain private after a string of financial difficulties, along with competition from other chains and a shift to healthier eating.

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Runup To Krispy Kreme IPO

Known for its glazed doughnuts and glaze-waterfall assembly lines, Krispy Kreme first went public in 2000. Despite drawing long lines outside its stores, the company ran into difficulties surrounding overexpansion and an investigation into its accounting practices. Some franchisees filed for bankruptcy protection.

Following the Krispy Kreme IPO, JAB would own around 77.6% of the company’s common stock through affiliates. That amount would be slightly less if the underwriters use their option to purchase extra stock.

Krispy Kreme was founded in the 1930s. It now sells doughnuts in about 1,400 of its shops and 12,000 other stores across 30 countries.

Along with its doughnut shops, Krispy Kreme sells doughnuts through grocery and convenience stores and via delivery. It also sells cookies — via Insomnia Cookies, a cookie delivery chain that it majority owns — and other snacks.

However, Krispy Kreme competes against the likes of Starbucks (SBUX), McDonald’s (MCD) and Dunkin’ Brands, which was bought by private-equity-backed Inspire in December.

And Krispy Kreme warned in its prospectus that “aggressive pricing by our competitors or the entrance of new competitors into our markets could reduce our sales and profit margins.”

“Moreover,” the Krispy Kreme IPO prospectus continued, “many of our competitors offer consumers a wider range of products. Many of our competitors or potential competitors have substantially greater financial and other resources than we do which may allow them to react to changes in pricing, marketing and the quick service restaurant industry better than we can.”


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