I was saddened to read a recent headline in USA Today that reported that an internal investigation at Krispy Kreme will force the doughnut chain to restate earnings by over $25 million going back to 2000 and perhaps earlier."Saddened" because it appears that another corporation has placed the need to satisfy Wall Street above doing business lawfully and with integrity.
And while the story could easily end here, a closer look reveals that ignoring the fundamental free market model of subjective value likely drove decisions that have resulted not only in various investigations but a loss of shareholder value that stood around $5o per share in 2000 and is around $7 per share today.
In fact , Krispy Kreme's decision to expand to todays 380 locations coincided with a change in consumer tastes to high protein, low carb foods such as meats, cheeses and nuts. And yes, this has fueled prosperous times for companies such as Diamond Foods. The success of Diamonds' Emerald-brand line of nuts is key to the company's July IPO. As of today, Diamond's stock price is up 24% from the orignal offering at $17.
So the lesson, dear reader, is that we must always conduct our affairs lawfully and with integrity as well as constantly evaluating and satisfying the changing needs of our customers. Only then do we create real long term value in society.
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