Krispy Kreme Considers Global Strategy

New York and L.A. swooned over Krispy Kreme doughnuts and now the company that refined the simple pleasure of hot, sticky snacks is thinking about going global.

The Winston-Salem company said late last week it has hired an executive to plot its global expansion strategy and has entered a partnership to expand into Canada — Krispy Kreme’s first foray outside the United States.

Krispy Kreme Doughnuts will take a 34 percent share of the Canadian operator, Krispy Kreme Doughnuts Eastern Canada Inc., which will open 32 stores over six years in Canada’s eastern provinces, including Ontario and Quebec.

The decision to hire Donald Henshall, 38, as president of international development while the company is still in the early stages of expanding across North America was a response to interest from potential foreign partners, president and chief executive officer Scott Livengood said.

“Hiring Don at this early stage gives us the opportunity to refine our global strategy and develop the capabilities and infrastructure to support expansion outside the U.S.,” he said. “It is also important to point out that we are structuring the organization in a way that ensures no loss of focus on our domestic market opportunities.”

Henshall will join the company in February from footwear and apparel maker Overland Group Ltd. in London. He previously was president and chief executive of clothing maker Diesel USA Inc.

John Glass, who tracks the company for Deutsche Bank Alex. Brown, said he though the company would do well as long as Krispy Kreme keeps its focus on North America, where opportunities are best.

The first overseas doughnut shop may be several years away, he added.

The company’s further expansion plans target U.S. cities with more than 100,000 households. Krispy Kreme said it has concluded an agreement with a partnership group that will open 16 stores over the next five years in Massachusetts, Rhode Island and Connecticut. New England was the last region of the country Krispy Kreme had targeted.

Krispy Kreme has been a favorite of investors since its April initial public offering, one of the rare successes in a tumultuous trading year. Shares were initially priced at $21 per share, opened at $32, and were trading today at $83, on the Nasdaq Stock Market.

Sales grew by 14.1 percent in the company’s fiscal year ended in January, topping sales growth of 9.7 percent in 1999 and 12.7 percent in 1998.

Profits for the first nine months of the fiscal year ending in October were $10.5 million, an increase of 119 percent compared to $4.8 million a year ago.

Krispy Kreme now operates 175 stores in 28 states.