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Since its inception in 1933 as a small doughnut store in the US, Krispy Kreme has transformed into a large chain of 420 stores worldwide by the early 21st century. However, the low-carbohydrate craze in the US coupled with the company''s overdependence on doughnuts led to its first quarterly loss in May 2004 and its shares declined by 29.2% to $22.51. Further, many of its franchisees went bankrupt and the company was forced to re-acquire them. However, the shareholders alleged that the company had misreported its profits and had also failed to issue a profit warning when it knew that its prediction for the quarter earnings would fall short. This was followed by a Securities and Exchange Commission (SEC) enquiry in July 2004. Under such circumstances, the Chief Executive Officer, Scott Livengood, stepped down in January 2005 and Stephen Cooper, a renowned turnaround specialist, was appointed to turn the company around and refurbish its declining image. The case study, while highlighting the troubled times at Krispy Kreme and the turnaround strategies initiated by Scott Livengood, offers scope to discuss how Stephen Cooper is turning them around to revive the sagging fortunes of the American doughnut icon. A structured assignment ''306-050-4'' is available to accompany this case.