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Krispy Kreme Doughnuts announced yesterday that it would cut about 25 percent of its 550-person corporate staff as it struggles with declining sales and the effects of accounting errors on the company. In addition, the company said it would have to find new funding by the end of March and said that there are no guarantees that such funding can be secured.

The company is still working to restate its financial results from the 2004 fiscal year, a process that has been complicated by how it repurchased some of its franchises and accounted for those acquisitions.

One indication of how tough things are for Krispy Kreme: management recently sold the corporate jet.
KC's View:
Reuters notes that Krispy Kreme’s stock price has dropped 77 percent in the past year. And while we don’t put a lot of faith in analysts, most of whom wouldn’t know a Krispy Kreme from a Dunkin’ Donut, in this case there’s almost no way to paint the news in hopeful colors.

Too bad. Because the world would be a lesser place without Krispy Kreme Key Lime Doughnuts.

Maybe the question is what company will come in and purchase Krispy Kreme, getting a bargain because of its current troubles, but also landing a lot of great real estate and a brand that remains highly recognizable and, we think, viable.