Krispy Kreme to float on US market after five-year absence | IPOs

Tell Homer Simpson: Krispy Kreme plans to float on the US stock market after a five-year gap, with sales of its doughnuts soaring as customers treated themselves during the pandemic.

The US company, which will list on New York’s Nasdaq under the “DNUT” ticker, on Tuesday announced record revenues for last year – although it remained unprofitable.

Sales of Krispy Kreme’s sugary doughnuts jumped to $1.1bn in 2020 – a 17% increase compared with 2019 – thanks in part to a switch to online deliveries. It was the first time annual sales have risen above $1bn (£700m) in its 83-year history.

The trend has continued in the first quarter of this year, with its stock market filing showing revenues up 23% to $321.8m.

Krispy Kreme hopes to target international expansion in a market for “indulgences” that it said was worth $650bn, as well as increasing the frequency of regular customers at cabinets in supermarkets including Sainsbury’s and Asda in the UK as well as its own shops. The stock market filing said that “almost all consumers desire an occasional indulgence”.

This desire existed “during good times and bad”, including during the pandemic, the company said. However, it added that the pandemic had dented its money-making ability despite the success of a promotion in March to offer a free doughnut to anyone in the US who received a Covid-19 vaccination.

The company said: “We believe market conditions will remain highly favourable as global consumers’ longstanding demand for quality indulgence continues to grow.”

In mandatory risk disclosures, Krispy Kreme highlighted that it could be vulnerable to changes to consumer tastes or litigation or regulation particularly related to dietary preferences. That could include the “perception that the practices of food service companies have contributed to nutritional, caloric intake, obesity, or other health concerns of their guests”, it said.

The company sold 1.3bn doughnuts in 30 countries in its 2020 financial year. Almost two-thirds of those sales were its “original glazed” sugar-coated variety, which contain 24g of sugars per 100g.

The company reported a net loss of $61m for 2020 as it expanded, highlighting difficulties of a different kind for a business that has moved between different owners several times in recent decades.

Krispy Kreme was founded in 1937 by Vernon Rudolph in North Carolina to supply doughnuts to grocery shops. It first listed on the stock market in 2000, but it was forced to file for bankruptcy five years later. In 2016, it was bought in a $1.35bn deal by an investment fund owned by JAB Holdings, an investment company owned by Germany’s wealthy Reimann family that later bought the sandwich chain Pret a Manger.

The company’s first retail store did not open until 1989, but by 2015 it counted its 1,000th opening. JAB has overseen a further expansion of Krispy Kreme’s operations, with revenues doubling between 2016 and 2020.

Krispy Kreme sells doughnuts in 5,000 outlets across the US, including 295 of its own stores. In the UK it runs 116 shops and almost 1,200 cabinets.