Krispy Kreme CEO Resigns
CHARLOTTE,
N.C. (AP) - Krispy Kreme Doughnuts Inc. chief executive
Daryl Brewster has resigned amid a sputtering turnaround effort.
The
Winston-Salem-based company said Monday that Brewster left his
position for personal reasons but will stay with the company until
the end of January.
The
board of directors has elected James Morgan to replace him.
"This
is not a divorce, this is more of a situation where the board
is saying let's re-evaluate things," said Harlan Platt, a
professor at Northeastern University who follows corporate turnarounds.
"They have fired him as head coach, but he's staying on the
sidelines."
Brewster
was named CEO in March 2006 to help lead Krispy Kreme through
a turnaround, but the company has continued to struggle. In December,
the company said its quarterly sales tumbled and it expected more
franchised store closures ahead. Morgan, 60, has been a Krispy
Kreme director since 2000, and he was elected chairman of the
board in 2005. In the past, he has worked for or been in charge
of various entities, including investment firm Covenant Capital
LLC, Interstate/Johnson Lane and Wachovia Securities Inc.
Investors
sent Krispy Kreme's battered shares up more than 12 percent in
midday trading. Krispy Kreme shares rose 35 cents to $3.18.
Krispy
Kreme, which sold its first glazed doughnut in 1937, has been
hurt over the past couple of years by allegations of misconduct
by former management, healthier eating trends, bankruptcy filings
by several of its franchisees and competition from larger rival
Dunkin' Donuts.
A
stock that once traded at more than $50 bottomed out at about
$4 in late 2005, and the company's board forced out two former
executives it said were trying to "manage earnings"
to meet Wall Street expectations.
Brewster's
departure appears to be yet another blow for the embattled doughnut
maker.
Over
the past year, the company has been touting a turnaround, and
in October Krispy Kreme shuffled executive slots and said it would
realign its franchise and company store operations. The reorganization
would help Krispy Kreme improve sales and cut costs, executives
said at the time.
Also
on Monday, Krispy Kreme said all of its products sold in the United
States now have zero grams of trans fat. The company said it has
been piloting zero grams trans fat products across the country
for the past several months.
The
chain's decision mirrors a move to erase trans fat by many fast-food
and quick service restaurant chains last year.
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