One Wall Street analyst isn't buying management's turnaround plan.Shares of donut maker Krispy Kreme (DNUT -3.62%) fell on Wednesday, down as much as 10.2%, before reverting to a 3.6% decline on the day.Krispy Kreme has had a tough 2025, which has seen the stock plunge 64% on the year. Tepid sales, falling profits, and the cancellation of a high-profile partnership with McDonald's have all been headwinds for the company.Today, a Wall Street analyst piled on, lowering his rating on the stock from neutral to ...

Krispy Kreme shares are dropping in morning trading Wednesday after JPMorgan downgraded the doughnut maker to an “underweight,” citing challenges to its turnaround plan. https://t.co/GEoe9HHkBp ...

What looked like a game-changing partnership in 2022 turned out to be a costly mistake in 2025. But the nationwide rollout was never completed, as Krispy Kreme pulled the plug on this project in the second quarter of 2025. Management noted that the doughnut delivery program was too expensive on a networkwide scale. Furthermore, it will take several quarters to unwind the attempts to build an effective production and delivery network in support of the McDonald's deal. What's next for Krispy Kreme? As a resul ...

Core Insights - Krispy Kreme's total revenue for the quarter ending June 2025 was $379.77 million, reflecting a year-over-year decline of 13.5% [4] - The company's international revenue accounted for 35% of total revenue, amounting to $132.76 million, which was an 11.48% surprise compared to analyst expectations [6] International Revenue Breakdown - Market Development generated $16.91 million, constituting 4.5% of total revenue, which was a decline of 27.17% from the projected $23.22 million [5] - International revenue showed a positive trend, increasing from $119.64 million (31.9%) in the previous quarter and $125.27 million (28.6%) in the same quarter last year [6] Future Projections - Analysts project total revenues of $381.23 million for the ongoing fiscal quarter, a slight increase of 0.4% from the previous year, with Market Development and International expected to contribute $20.7 million (5.4%) and $126.78 million (33.3%) respectively [7] - For the entire year, total revenue is forecasted to be $1.55 billion, a reduction of 6.8% from the previous year, with Market Development contributing $84.16 million (5.4%) and International $504.2 million (32.5%) [8] Market Context - The reliance on international markets presents both opportunities and challenges for Krispy Kreme, making it crucial to monitor international revenue trends for future projections [9] - Wall Street analysts are increasingly focused on international interdependencies and geopolitical factors that may influence earnings forecasts for companies with a global presence [10]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Unaudited Q2 2025 financials report a $441.1 million net loss, driven by a $406.9 million impairment, with revenues down 13.5% and negative operating cash flow [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 net revenues fell 13.5% to $379.8 million, leading to a $434.6 million operating loss primarily from a $406.9 million impairment Q2 2025 vs Q2 2024 Statement of Operations Highlights (in thousands) | Metric | Q2 2025 (13 weeks) | Q2 2024 (13 weeks) | Change (%) | | :--- | :--- | :--- | :--- | | Total net revenues | $379,767 | $438,809 | -13.5% | | Goodwill and other asset impairments | $406,932 | $201 | N/A | | Operating (loss)/income | $(434,551) | $6,859 | N/A | | Net loss attributable to Krispy Kreme, Inc. | $(435,260) | $(5,491) | N/A | | Diluted Net loss per share | $(2.55) | $(0.03) | N/A | - A substantial goodwill and other asset impairment charge of **$406.9 million** was the primary driver of the significant operating and net losses in the second quarter of 2025[9](index=9&type=chunk) [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $2.63 billion due to goodwill impairment, with retained deficit widening to $774.2 million and total debt increasing Balance Sheet Highlights (in thousands) | Account | June 29, 2025 | December 29, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $21,264 | $28,962 | | Goodwill, net | $711,780 | $1,047,581 | | Total assets | $2,630,474 | $3,072,030 | | **Liabilities & Equity** | | | | Total long-term debt (incl. current) | $957,045 | $900,903 | | Total liabilities | $1,912,285 | $1,907,598 | | Retained deficit | $(774,164) | $(299,638) | | Total shareholders' equity | $718,189 | $1,164,432 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) H1 2025 operating cash flow was negative $53.4 million, offset by $30.9 million from investing activities, mainly Insomnia Cookies divestiture proceeds Cash Flow Summary - Two Quarters Ended (in thousands) | Cash Flow Activity | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net cash (used for)/provided by operating activities | $(53,377) | $15,525 | | Net cash provided by/(used for) investing activities | $30,937 | $(65,161) | | Net cash provided by financing activities | $16,248 | $40,245 | | **Net decrease in cash** | **$(7,492)** | **$(9,506)** | - The company received **$75.0 million** in net proceeds from the divestiture of Insomnia Cookies, which was a major source of cash from investing activities[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail McDonald's USA agreement termination, a $356.0 million goodwill impairment, Insomnia Cookies divestiture, and new legal proceedings - The Business Relationship Agreement with McDonald's USA was terminated effective July 2, 2025, with neither party having further obligations except for confidentiality and indemnification[28](index=28&type=chunk) - The company recognized a cumulative, non-cash, partial goodwill impairment charge of **$356.0 million** in Q2 2025 for its U.S., KK U.K., and KK Australia reporting units[30](index=30&type=chunk) - The company sold its remaining ownership interest in Insomnia Cookies for **$75.0 million** in cash, resulting in a loss on divestiture of **$11.5 million**[40](index=40&type=chunk) - New legal proceedings were filed against the company, including federal securities class actions related to the McDonald's agreement and class actions related to a 2024 data breach[77](index=77&type=chunk)[78](index=78&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 revenue decline, McDonald's partnership termination, a $406.9 million impairment, increased leverage, and a new turnaround plan - The company has implemented a comprehensive turnaround plan focusing on refranchising international markets, reducing capital intensity, expanding profit margins through operational efficiency, and pursuing sustainable U.S. growth[104](index=104&type=chunk) - The partnership with McDonald's USA was terminated effective July 2, 2025, as it was deemed unsustainable, with expected positive impact on U.S. segment profitability from Q3 2025[105](index=105&type=chunk) - The company no longer expects to pay quarterly cash dividends, a change from its previously disclosed policy, to better align capital allocation with its growth strategy[174](index=174&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) Q2 2025 net revenue fell 13.5% to $379.8 million, with organic revenue down 0.8%, leading to a $434.6 million operating loss and a 63.3% Adjusted EBITDA decline Q2 2025 vs Q2 2024 Revenue Performance | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Net Revenues | $379.8M | $438.8M | -13.5% | | Organic Revenue Decline | | | -0.8% | Q2 2025 Adjusted EBITDA by Segment (in thousands) | Segment | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | U.S. | $9,930 | $32,668 | -69.6% | | International | $18,221 | $21,655 | -15.9% | | Market Development | $8,948 | $12,875 | -30.5% | | **Total Adjusted EBITDA** | **$20,111** | **$54,726** | **-63.3%** | - The U.S. segment's Adjusted EBITDA decline was primarily driven by an estimated **$7 million to $9 million** adverse impact from the now-ended McDonald's USA partnership and lower transaction volumes[148](index=148&type=chunk) [Capital Resources and Liquidity](index=54&type=section&id=Capital%20Resources%20and%20Liquidity) Liquidity sources include cash and credit facilities, with total debt at $957.0 million, a leverage ratio of 4.5x, and a new policy of no quarterly dividends - The company's leverage ratio increased to **4.5 to 1.00** as of the end of Q2 2025, compared to **3.9 to 1.00** at the end of fiscal 2024, remaining in compliance with financial covenants[182](index=182&type=chunk)[183](index=183&type=chunk) - The company has changed its dividend policy and no longer expects to pay quarterly cash dividends to common stockholders[174](index=174&type=chunk) Key Liquidity and Debt Figures (in millions) | Metric | June 29, 2025 | December 29, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $21.3 | $29.0 | | Total long-term debt | $957.0 | $900.9 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from commodity price volatility, interest rate fluctuations on variable debt, and foreign currency exchange rate changes - The company faces commodity price risk for key ingredients (flour, sugar, shortening) and gasoline, which are subject to market volatility and geopolitical factors[188](index=188&type=chunk)[189](index=189&type=chunk) - The company has interest rate risk on **$316.3 million** of unhedged variable-rate debt, where a **100 basis point** change in SOFR would alter annual interest expense by approximately **$3.2 million**[190](index=190&type=chunk) - Foreign currency exchange rate risk is significant, as **33%** of revenues come from outside the U.S., with a **10%** change in key exchange rates impacting H1 2025 revenues by an estimated **$25.2 million**[191](index=191&type=chunk) [Item 4. Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) A new material weakness in goodwill impairment assessment controls led to ineffective disclosure controls as of Q2 2025, replacing a remediated weakness - A previously disclosed material weakness related to journal entry system controls has been successfully remediated[194](index=194&type=chunk) - A new material weakness was identified in Q2 2025 related to the review of inputs and assumptions for the non-routine goodwill impairment assessment[196](index=196&type=chunk) - Due to the new material weakness, the CEO and CFO concluded that the company's disclosure controls and procedures were not effective as of June 29, 2025[195](index=195&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, with new securities class actions and data breach litigation commencing - The company is subject to various legal proceedings, with details on new litigation that began in Q2 2025 available in Note 12 of the financial statements[201](index=201&type=chunk) [Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported in the current period - No material changes to risk factors were reported compared to the latest Annual Report on Form 10-K[202](index=202&type=chunk) [Other Items (Items 2, 3, 4, 5, 6)](index=61&type=section&id=Other%20Items) Part II includes no unregistered equity sales, no senior security defaults, no mine safety disclosures, and lists exhibits - The company reported "None" for Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information)[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)

Krispy Kreme recorded a bigger loss in the second quarter after writing down multiple operating segments, along with lower sales https://t.co/42OXg4wIhw ...

Core Insights - Krispy Kreme reported a revenue of $379.77 million for the quarter ended June 2025, reflecting a year-over-year decline of 13.5% and an EPS of -$0.15 compared to $0.05 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $376.41 million by 0.89%, while the EPS fell short of the consensus estimate of -$0.04 by 275% [1] Financial Performance - The company’s shares have returned +4.3% over the past month, outperforming the Zacks S&P 500 composite's +1.2% change, and currently holds a Zacks Rank 3 (Hold) [3] - Geographic revenue breakdown shows U.S. revenue at $230.1 million, down 20.5% year-over-year, while International revenue was $132.76 million, up 6% year-over-year [4] Access Points and Estimates - Total Global Points of Access stood at 18,113, slightly below the average estimate of 18,447 [4] - Specific access points in the U.S. included 6 Doughnut Factories, 68 Fresh Shops, and 9,869 DFD Doors, with most figures aligning closely with analyst estimates [4]

Financial Data and Key Metrics Changes - Net revenue for the second quarter was $379.8 million, reflecting a decrease of $64.2 million due to the divestiture of Insomnia Cookies and an organic revenue decline of 0.8% driven by lower transactions related to consumer softness [19] - Adjusted EBITDA was $20.1 million, down from $54.7 million last year, impacted by the divestiture and losses from the ended McDonald's USA partnership [19][14] - The bank leverage ratio was 4.5 at the end of the quarter, below the five leverage ratio limit in the credit facility [24] Business Line Data and Key Metrics Changes - In the U.S. segment, retail transactions improved sequentially, but there was a 3.1% organic revenue decline due to expected consumer softness and strategic closures of underperforming doors [20] - Adjusted EBITDA for the U.S. segment was $9.9 million, down from $32.7 million last year, affected by the McDonald's partnership and retail transaction decline [20] - Within international equity markets, organic revenue grew by 5.9%, driven by growth in Canada, Mexico, and Japan, despite 177 strategic door closures [21] Market Data and Key Metrics Changes - The market development segment saw an organic revenue decline of 14.2%, with growth in new markets like Brazil offset by timing of product and equipment sales [22] - Adjusted EBITDA for the market development segment was $8.9 million, with a margin rate roughly flat year over year at 52.9% [22] Company Strategy and Development Direction - The company is focused on profitable U.S. expansion and capital-light international franchise growth, implementing a comprehensive turnaround plan to deleverage the balance sheet [5][26] - The strategy includes refranchising select international markets and improving returns on capital while expanding margins [5][6] - The marketing focus has shifted to the Original Glazed Doughnut, with a new multimedia campaign launched to drive sales [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in recent quarters but expressed confidence in the turnaround plan and the strength of the leadership team [16][12] - The company expects to see benefits from the turnaround plan within the year, with improved EBITDA and positive cash flow anticipated in the second half [39] Other Important Information - The company has halted the quarterly cash dividend and completed the sale of its remaining interest in Insomnia Cookies to pay down debt [5] - A 15% reduction in G&A roles in the support center has been implemented to reduce costs [9] Q&A Session Summary Question: On DFD doors and profitability management - Management emphasized the importance of high traffic and visibility for sustainable sales and mentioned the shift to third-party logistics for predictable costs [29] Question: Productivity in high-cost retail areas - Management acknowledged opportunities for optimizing efficiency in production hubs and improving the DFD footprint [31] Question: Duration risk in refranchising - Management is targeting one to two deals this year in Japan, Mexico, UK, and Australia to deleverage and pay down debt [33] Question: Simultaneous implementation of turnaround components - Management confirmed that all components of the turnaround plan are already underway and expect benefits within the year [38] Question: Rationalizing DFD doors - Management identified 1,500 underperforming doors for closure and plans to replace them with higher sales doors, expecting a small churn of about 5% annually [41] Question: CapEx and capital-light approach - Management indicated that CapEx as a percentage of revenue is expected to decrease as the company moves to a capital-light model [47] Question: Long-term structure of Krispy Kreme - Management reiterated that Krispy Kreme is primarily a growth story, focusing on maximizing shareholder value through franchising and multichannel opportunities [48]

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Krispy Kreme shares have lost about 65.6% since the beginning of the year versus the S&P 500's gain of 7.9%. What's Next for Krispy Kreme? While Krispy Kreme has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? Krispy Kreme (DNUT) came out wit ...

Cautionary Note Regarding Forward-Looking Statements Krispy Kreme, Inc. SECOND QUARTER 2025 EARNINGS PRESENTATION AUGUST 7, 2025 Krispy Kreme | 2Q25 Earnings 1 Certain statements made in this presentation and on the conference call that this presentation accompanies are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of forward-looking terminology, including terms such as "plan," "believe," "may," ...