Zacks_Analysts' Blog : Krispy Fortifies Base in S.Carolina - Analyst Blog

Winston-Salem, North Carolina-based Krispy Kreme Doughnuts, Inc (KKD), which currently owns and operates 86 stores and franchises 566, has opened its second neighborhood shop in Columbia, South Carolina. The company opened its first 2,000-square feet store in Columbia in May 2011.

The newly opened shop covers approximately 2,000 square feet and also includes a drive-thru. It is situated on Clemson Road and is expected to benefit from its favorable location. The menu also offers great variety including the company’s signature hot Original Glazed doughnuts, signature coffees and espresso drinks and Krispy Kreme Chillers and iced beverages.

The new shop also marks the company’s fourth store in central South Carolina region and over the past two years, Krispy Kreme has  been successful in offering its products to more and more customers by opening stores throughout the Carolinas.

Krispy Kreme plans to open 30 international franchise stores, 5 to 10 company stores, and 5 to 15 domestic franchise stores in 2012. It continues to expand through franchises, as this strategy reduces capital requirement and ensures a stable growth profile.

The company has also inked a deal through its subsidiary with the franchisee KDN Company Limited for 20 new stores in Thailand to be opened by 2015. Krispy Kreme also plans to open 14 stores through its franchisee in Dominican Republic in the next five years.   

Despite witnessing growth from the new units, Krispy Kreme will face stiff competition in Columbia from Red Robin Gourmet Burgers Inc. (RRGB) and Domino’s Pizza Inc. (DPZ), which also boast a strong foothold in the region.

Krispy Kreme currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating. We are also maintaining our long-term Outperform recommendation on the stock.

The company was founded in 1937 and it engages in owning and franchising Krispy Kreme doughnut stores.