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Krispy Kreme Plans 71% Jump in U.S. Shop Network by 2017

Jan. 16 (Bloomberg) -- Krispy Kreme Doughnuts Inc., which adopted measures to discourage a buyer amid speculation it’s an acquisition target, plans a 71 percent increase in its U.S. shop network by 2017 after restraining growth this fiscal year.

Krispy Kreme is targeting 400 outlets domestically, compared with a 234-store network in the 12 months through January 2012 and 240 in the year ending this month, the Winston- Salem, North Carolina-based retailer said today in a statement. It reiterated a target set a year ago of expanding franchises abroad to 900 outlets in 2017 versus 506 currently.

The company “remains keenly interested in enhancing returns to shareholders” following a stock buyback in the first half, it said.

The takeover-prevention plan is aimed at discouraging investors from buying 5 percent more of Krispy Kreme’s stock by limiting the way previous operating losses and other credits could be applied to future taxes, the company said yesterday. The retailer has become a potential takeover target since Chief Executive Officer James Morgan boosted sales with an expanded menu that includes such healthier items as oatmeal, fruit juice and smoothies.

Krispy Kreme has surged 60 percent in the past 12 months, including a 22 percent jump this month. The stock fell 3.2 percent to $11.44 at the close yesterday in New York following the tax-strategy announcement.

U.S. franchise-outlet growth will be “primarily outside the southeast,” while company-owned store openings will be focused on its home region, Krispy Kreme said today. International store-development agreements are in place in countries including India, Russia and Mexico, it said.

Competitor Dunkin’ Brands Group Inc. (DNKN) said its Dunkin’ Donuts baked-goods chain plans growth of as much as 24 percent in net new restaurants this year from 291 new outlets in 2012. The Canton, Massachusetts-based company intends to enter the southern California market in 2015, and is recruiting potential multi-unit franchisees for the area, it said today in a statement.

To contact the reporter on this story: Tom Lavell in Frankfurt at tlavell@bloomberg.net

To contact the editor responsible for this story: David Risser at drisser@bloomberg.net

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