Krispy Kreme rebounds in UNH franchise index

Struggling doughnut maker Krispy Kreme rebounded in the latest University of New Hampshire Rosenberg Center Franchise 50 Index, regaining some of its market value in the first quarter of 2006 and leading the winners in the index.

All told, the Franchise 50 Index rose 3.4 percent in the first quarter of 2006, helped by increases in 41 of its 50 company components. The S&P 500 Index moved up 3.7 percent over the same period thanks to large increases in its energy and materials components.

The Rosenberg Center Franchise 50 Index, developed by The William Rosenberg International Center for Franchising at UNH’s Whittemore School of Business and Economics, tracks the market performance of the top 50 U.S. public franchisors, which in total represent more than 98 percent of the market capitalization of all U.S. public companies engaged in business format franchising.

Krispy Kreme’s stock price recovered some of the large losses it suffered over the last few years due to accounting irregularities and questions related to corporate accountability, jumping 56.4 percent this quarter.

From a high of $49.37 in August 2003, Krispy Kreme’s stock price tumbled to $4.05 by October 2005, a 92 percent drop. O March 7 its stock shot up more than 20 percent after Daryl G. Brewster, previously the head of Kraft Inc.’s $6 billion North American snack and cereals business, was named the firm’s new CEO. He has significant experience turning around struggling businesses (Campbell Soup in the 1980s, Planters division of Kraft more recently).

The index’s biggest loser in the first quarter of 2006 was H&R Block Inc., the nation’s largest tax preparer and the provider of other financial services.

H&R Block lost 11.5 percent of its market value in the quarter due to a series of financial difficulties – including a 68 percent drop in profits – and the restatement of its 2004 through 2006 financial reports because it misstated its own income tax liabilities. In addition, New York Attorney General Eliot Spitzer filed a $250 million lawsuit against it, accusing it of fraudulent business practices related to IRA accounts marketed to its tax preparation customers.

The full Rosenberg Center Franchise 50 Index first-quarter report is available at unh.edu/news. – JEFF FEINGOLD