NEWARK, N.J., May 21, 2004 (PRIMEZONE) -- Zimmerman, Levi & Korsinsky, LLP today announced that it has commenced a securities lawsuit on behalf of shareholders who purchased the common stock of Krispy Kreme Doughnuts Inc., (NYSE:KKD) ("Krispy Kreme" or the "Company") from August 21, 2003 through May 7, 2004, inclusive (the "Class Period"). The lawsuit was filed in the United States District Court for the Middle District of North Carolina.
The complaint charges that Krispy Kreme, Randy S. Casstevens, Scott Livengood, Michael Phalen, and John Tate, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between August 21, 2003 and May 7, 2004, about the Company's financial condition thereby artificially inflating the price of Krispy Kreme's stock. More specifically, the Complaint alleges that: (i) as a result of the trend toward low-fat, low carbohydrate diets, such as the South Beach and Atkins diets, Krispy Kreme had been suffering from increasingly poor sales performance; (ii) defendants knew or recklessly disregarded that the trend toward low-fat, low-carbohydrate diets was not the sole reason for the Company's worsening financial condition; (iii) while the opening of each new Krispy Kreme stores created an initial surge in sales, sales at those newly-opened stores quickly dropped off and rather than improving the weakening sales at existing stores, the Company instead attempted to increase sales by continually adding new stores and hyping the Company's entry into new markets; (iv) during the Class Period, the Company repurchased several franchises which may have otherwise been an indication of trouble but for the Company's materially false and misleading statements that the repurchases were all part of its "acquisition strategy"; and (v) the Company's strategy of offsetting slowing retail sales with wholesale shipments to supermarkets was failing because the Company's wholesale business was more expensive to operate and the Company's wholesale business was saturating the market with Krispy Kreme products thereby eating into the company's retail operations and decreasing the Company's overall profit margin. On May 7, 2004, Krispy Kreme announced that it expects fiscal 2005 diluted earnings per share from continuing operations, excluding certain charges, to be 10% lower than previously announced guidance. News of this caused shares of Krispy Kreme to drop $9.29 per share or 29.21 percent on May 7, 2004 closing at $22.51 per share. If you purchased Krispy Kreme stock between August 21, 2003 and May 7, 2004, you may move the court no later than July 11, 2004 to serve as a lead plaintiff. In order to serve as lead plaintiff, however, you must meet certain legal requirements. You may retain Zimmerman, Levi & Korsinsky, LLP, or other counsel of your choice, to serve as your counsel in this action.
For more information or to obtain a copy of the complaint and other information in order to join the lawsuit via E-mail or U.S. Mail, please contact:
Eduard Korsinsky, Esq. Zimmerman, Levi & Korsinsky, LLP 39 Broadway, Suite 1440, New York, N.Y. 10006 Tel. (212) 363-7500 Toll Free: (800) 835-4950 Email: ek@zlklaw.com
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca