It has been reported that less than 1 percent of new products generate more than $25 million in first year of sales. Snack chip competitors rely heavily on electronic and print media advertising, consumer promotions, and trade allowances to stimulate sales and manufacturers often rely on price deals to attract consumers. The technology used to produce snack chips allows manufacturers to react quickly to new products introduction by competitors. Extensive sales and distribution systems employed by national brand competitors also allows them to monitor new product and promotion activities and place competing products quickly in the supermarkets. Snack chips are sold by national brand firms, regional brand firms, and private brand firms.
Krispy Kreme Doughnuts’ ‘assets held for sale’ is up almost $37 million in the Feb. 2004 filing. Their “reacquired franchise rights, goodwill, other intangibles” entry skyrockets from $49 million in the 2002 fiscal year to $175 million in the 2003
The income statement’s total revenues doubled in two years due to their unusual growth. The problem to behind income statement and balance sheets stems from their company owned and franchised factories; instead of selling the donuts, the company sold machinery to make their products. The goodwill and required franchise rights doubled each year until 2004 which raised questions and concerns as to whether Krispy Kreme improperly implemented accounting treatments. Compared to the industry, Krispy Kreme was apparently a very high performing company, but we questioned the performance data. First problem we encountered were the current and quick ratios were unusually high due to the amount of cash, receivables and short term investments that Krispy Kreme held.
In recent years, the company increased its number of outstanding share to finance its acquisitions, which raised the payout ratio to more than 50% in 2006. Blaine Kitchenware fears that such a dividend policy isn’t sustainable in the future. Indeed, if the company keeps a high dividend payout without the cash flow to back it up, it will have to reduce its investment plans or turn to investors for additional debt or equity financing. As pointed by a banker, because the company is over-liquid and under-levered, using Blaine kitchenware’s excess cash and new borrowing, a private equity firm could buy all the outstanding share of the company. In light of that discovery and fearing this hostile takeover, Victor Dubinski is thinking of revising the company’s financial policy (i.e.
Its shops tripled from 2000 to 2004, with 427 stores in 45 states and four foreign countries. However, at the end of 2004, the company announced several accounting revelations, changing image of the company in Wall Street and plummeting its stock price in the market. On May 7, 2004, it indicated that its Hot Doughnut and Coffee Shops were falling short of expectations and that it had plans to close three of them (resulting in a charge of 7 to 8 million dollars). Following the news, the Wall Street Journal addressed the aggressive accounting treatment the company had made for franchise acquisitions. For instance, it purchased a struggling Michigan franchise, asked some of its underperforming stores to be closed, and agreed to pay the company’s accrued interest on past-due loans for it to raise its purchase price of the franchise.
Krispy Kreme is a chain of doughnut stores. Its parent company is Krispy Kreme Doughnuts. Inc, based in Winston-Salem, North Carolina, United States. Since Krispy Kreme was founded in 1937, it has grown into a leading branded specialty retailer, producing more than 5 million doughnuts a day and over 1.8 billion a year. In the 1990s, Krispy Kreme grew rapidly to the national phenomenon with 366 stores in 44 states.
1. Using the “DECIDE” procedure/formula, analyze the above case. (50 points) Company Background Frito-Lay Company is the world leader in the salty snack category, controlling more than 35 percent of the world market in snack chips and 60 percent in the United States. Among the company's well-known brands are five that generate annual sales of $1 billion each: Lay's, Ruffles, Doritos, Tostitos, and Chee-tos. In addition to its dominance of the potato chip, tortilla chip, and corn chip sectors (the last of these led by the Fritos brand), Frito-Lay has major brands in other categories, such as Rold Gold pretzels, Cracker Jack candy-coated popcorn, and Grandma's cookies.
2010) is provided below. 1167872 4 Despite the leading position and the good business results, SWOT shows several sources of potential risks for UST. The company is losing market share against new price-value competitors because of slow innovation and late product introduction and extensions. Historically, UST relied on his leading market position boosting earnings with annual prices increases. But in the meanwhile smaller competitors started to quickly erode market share with prices cut.
As we can see, these two factors would give any company a big edge in the frozen novelty industry, which in my mind commands a higher premium. When estimating Eskimo Pie’s value, past performance must also be considered. As can be seen from Exhibit 1 in the case, net sales have increased over 50% since 1987 ([47198 - 30,769] / 30,769), and profits have skyrocketed over 1300% since 1987 ([2526-171] / 171). Taking into account all of these factors in to account, I think that as a stand-alone company, Eskimo is worth at least 1.3 times 1990 sales, or $61 million. 2.
Example General Mills dominates Cereal while Frito-lay dominates Snacks/chips, Kraft dominates cheese based, ConAgro dominates Corn based products like popcorn, and finally Campbell dominates Soup and vegetable drinks. Nestle is the rightful market leader in terms of Size and number of brands its revenue is 141 billion nearly 6 times of General mills. They compete in various segments like Ice Cream, Packages food, Frozen Food. But in the last two years General Mills has changed the industry with its Acquisition of Yoplait and making it one of the biggest Yogurt brands in U.S. they increased the market share considerably to worry Dannon the Yogurt market leader. General Mills made 4 basic changes to position themselves better and increase their market cap.