Krispy Kreme Doughnuts has filed documents for a $100 million initial public offering on Tuesday, hoping that its strong revenue growth and shifted plans for sales at retail shops can win over investors that have had few bites at new restaurant stocks in recent years.
The Winston Salem, N.C.-based chain plans to use the funds to pay off a 2019 credit facility. The company has $1.2 billion in debt and interest on that debt has largely kept the company from turning a profit despite consistently increasing revenues.
Krispy Kreme, which will trade on the Nasdaq stock exchange under the ticker symbol DNUT, reported a loss of $3 million in the quarter ended April 4, though that was improved from an $11.5 million loss in the same period a year ago. The company generated $321.8 million in revenue, up 23% from a year ago.
Krispy Kreme had been a public company until it was taken private by the European investment firm JAB Holdings in 2016.
In the years since then it has grown revenue by an average of 19% a year. The company in 2018 acquired the cookie delivery concept Insomnia Cookies—which currently operates 191 locations.
Krispy Kreme has also shifted its retail strategy to what it calls “delivered fresh daily” at places like convenience stores and grocers, opting to leave unprofitable locations and select places where it can provide fresher doughnuts. It also created a “branded sweet treats” line for retailers.
The number of Krispy Kreme locations has also grown, to 1,515 globally last year from 1,409 at the end of 2018, according to federal securities filings. It sells products in an additional 7,371 “delivered fresh daily” locations around the world.
J.P. Morgan, Morgan Stanley, BofA Securities and Citigroup are the lead book-running managers from Krispy Kreme’s proposed offering. BNP Paribas, Deutsche Bank Securities, Evercore ISI, Goldman Sachs & Co, HSBC, Truist Securities and Wells Fargo Securitiesa re joint book-running managers.
Capital One Securities, C.L. King & Associates, Credit Agricole CIB, Mischler Financial Group, MUFG, Ramirez & Co., Santander Investment Securities and Siebert Williams Shank are co-managers.