Emerson Poynter LLP Announces Investigation on Behalf of Participants and Beneficiaries of The Krispy Kreme Doughnut Corp. Retirement Savings Plan and The Krispy Kreme Profit Sharing Stock Ownership Plan -- KKD


HOUSTON, Aug. 4, 2004 (PRIMEZONE) -- Emerson Poynter LLP today announced that it has begun an investigation regarding Krispy Kreme Doughnuts, Inc. ("Krispy Kreme" or the "Company") (NYSE:KKD) for violations of the Employee Retirement Income Security Act of 1974 ("ERISA"). The investigation focuses on investments in Company stock by the Krispy Kreme Doughnut Corp. Retirement Savings Plan and the Krispy Kreme Profit Sharing Stock Ownership Plan (the "Plans") between August 21, 2003 and the present (the "Class Period").

Emerson Poynter's investigation of the retirement plans focuses on concerns that Krispy Kreme and other fiduciaries for the Plans may have breached their ERISA-mandated fiduciary duties of loyalty and prudence by (1) failing to prudently and loyally manage the Plans' assets by imprudently investing a significant amount of the Plans' assets in Krispy Kreme stock; (2) failing to monitor and provide fiduciary appointees with information that the appointing fiduciaries knew or should have known that the monitored fiduciaries must have in order to prudently manage the Plans' assets; (3) failing to provide complete and accurate information to participants and beneficiaries; and (4) breaching their duty to avoid conflicts of interest.

Specifically, Emerson Poynter is investigating allegations that, during the Class Period, Krispy Kreme stock was an imprudent retirement investment because (1) Krispy Kreme repeatedly reported strong operational growth and substantial increases in revenues, income and earnings per share and represented that the Company would continue to grow when in reality Krispy Kreme had been suffering from increasingly poor sales performance; (2) Krispy Kreme adopted a business model and strategy for increasing sales that was predicated on the perpetual addition of new stores and the hyping of the Company's entry into new markets, which resulted in unsustainable surges in sales that fell off once the hype ceased and the novelty of the new store wore off; and (3) Krispy Kreme's wholesale business was saturating the market with Krispy Kreme products which decreased the Company's overall profit margin; and (5) the price of Krispy Kreme's common stock was therefore artificially inflated during the Class Period.

On July 30th, it was announced that the Company was also under investigation by the Securities and Exchange Commission. The SEC investigation concerns the Company's reacquisition of franchises and its warning in May 2004 that earnings would fall short of the previously announced reduction in earnings guidance. The stock closed at $15.71 per share on this news, a low for the year. At the start of the class period, August 21, 2003, the stock traded as high as $47.50 per share.

Emerson Poynter LLP has substantial experience representing plan participants in ERISA actions and investors in securities fraud class action lawsuits. The firm represents investors and retirement plan participants throughout the nation in such cases as Enron, Reliant Energy, Goodyear, and ADC Telecommunications from its offices in Houston, Seattle, and Little Rock.

If you are a member of one of the Plans and purchased or held Krispy Kreme stock through the Plans, please contact two of our paralegals, Tanya Autry or Michelle Raggio, or any other member of our team (Scott Poynter or John Emerson) by calling toll-free at 800/663-9817 or via e-mail at shareholder@emersonfirm.com.

More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca



            

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