Krispy Kreme Doughnuts (KKD) on Tuesday hired longtime snack-food executive Daryl Brewster to steer it out of the final phase of its turnaround effort.Brewster, a 23-year veteran of the food business, had been president of Kraft Food’s (KFT) $6 billion North American Snacks & Cereals unit. Brewster came to Kraft in 1997 from Campbell Soup and also led Kraft’s Nabisco Biscuit.
“We view Brewster as a strong hire,” says JPMorgan analyst John Ivankoe, ticking off his years of brand strategy, marketing and distribution experience.
Brewster succeeds interim CEO Stephen Cooper, chairman of turnaround specialist firm Kroll Zolfo Cooper, which was hired more than a year ago by Winston-Salem, N.C.-based Krispy Kreme. The firm will remain involved in the restructuring.
Known to be a good communicator and action-oriented, Brewster already was trying to put those skills to work in a Tuesday conference call with Krispy Kreme franchisees.
They need the boost as much as investors. It was problems with Krispy Kreme’s accounting for franchises that set off an investigation by the Securities and Exchange Commission more than a year ago.
“I laid out for franchisees why I was interested in coming to the organization,” says Brewster, 49. “I was looking to run a business that was a great brand, with great potential and great people.”
Though he wouldn’t specify his plans to continue the comeback, he says, “It’s a good product line to enhance and improve.”
His words and actions will be watched by Wall Street the way customers gawk at the company’s glazed doughnuts being made.
Shares shot up $1.32, or 20.7%, on Tuesday to close at $7.71, but Ivankoe is cautious.
“While a new CEO is a positive for the stock, much uncertainty still remains with regards to the fundamentals of the business and the timing of a turnaround.”
The business, founded in 1937, has been publicly traded for nearly six years and has seen sales growth slow for a couple of years. More recently it has been trying to complete promised earnings reports.
Questions about earnings accounting led to the board’s ouster last year of several top executives, including then-CEO Scott Livengood.
Cooper was brought on board along with Steven Panagos, a managing director at the turnaround firm, as interim president. Cooper will remain at Krispy Kreme as chief restructuring officer and Panagos as director of restructuring. Previous efforts included involvement in the Enron cleanup and in restructuring at Sunbeam, Polaroid and Morrison Knudsen.
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