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Reuters
Krispy Kreme Reveals SEC Probe
Thursday July 29, 5:28 pm ET
By Nichola Groom
NEW YORK (Reuters) - Krispy Kreme Doughnuts Inc. (NYSE:KKD - News) on Thursday said federal regulators are investigating its repurchase of franchises and lowered earnings outlook, sending the doughnut chain's shares down more than 15 percent.
The informal probe by the U.S. Securities and Exchange Commission comes as Krispy Kreme is struggling to revitalize sales, particularly in supermarkets.
The company in May slashed its profit forecast for the year by 10 percent, blaming the popularity of low-carbohydrate diets such as the Atkins and South Beach, which frown on starchy foods like pastries and bread.
But one analyst said Krispy Kreme's problems go beyond the low-carb trend and added that the company may be forced to restate some financial results.
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