Charlotte, N.C. – Krispy Kreme Doughnuts Inc. ousted six company executives today, but declined to name them or say why a special committee formed by the company recommended that they be discharged.
Five of the executives resigned and one retired, the troubled Winston-Salem company said in a terse statement. A company spokeswoman declined to provide any additional comment.
Once a Wall Street darling, Krispy Kreme has been the target of investigations into the way it accounted for franchise buybacks and slower sales.
Krispy Kreme shares were halted for trading early today. Its shares fell 1 cent, or 0.1 percent, to close at $7.66 in late today trading on the New York Stock Exchange.
The stock has steadily declined from its high near $50 in the summer of 2003, hitting a low of $5.05 in February. Shares are down about 39 percent so far this year.
The six former officers include four senior vice presidents in the areas of operations, finance, business development and manufacturing and distribution, the company said in a statement.
Krispy Kreme said it plans to fill the jobs with existing personnel.
Turnaround specialist Bill Brandt Jr. with Development Specialists Inc. in Chicago questioned the timing of the announcement.
“If they were going to let them go it would have been better to do so much earlier in the process,” he said. “This timing is particularly unfortunate because it is part of a steady stream of bad news.
“I’ve always maintained that if you are going to clean house, it’s better to do it as early as you can and on the same day.” Meanwhile, the company’s special committee was continuing an internal investigation. Company officers also were cooperating with the U.S. Attorney’s Office for the Southern District of New York and the Securities and Exchange Commission in their separate investigations.
Last fall, the company formed the special committee to examine whether earnings should be restated. Krispy Kreme also has been hit with several lawsuits, including one that alleges workers lost millions of dollars in retirement savings because executives at the company hid evidence of declining sales and profits.
On June 13, Krispy Kreme said it will miss a deadline for filing financial results for the first quarter that ended May 1, and expects to post a loss when it does file the report.
In a filing with the SEC, Krispy Kreme said it was unable to file the quarterly report because of the ongoing internal review of its accounting practices for fiscal 2005 and earlier years.
