Market Overview - U.S. stocks closed mixed with the Dow Jones Industrial Average increasing by 0.6% to 46,018.32, while the S&P 500 decreased by 0.1% to 6,600.35 and the Nasdaq fell by 0.3% to 22,261.33 [1] Federal Reserve Actions - The Federal Reserve cut its benchmark rate by 25 basis points to a range of 4.00%-4.25%, ending a nine-month pause and marking the fourth reduction in the current easing cycle [2] - Policymakers projected faster rate cuts ahead, lowering their 2025 outlook to 3.6% from 3.9%, while upgrading GDP forecasts and acknowledging persistent inflation pressures [2] Company Stock Performances - **Cracker Barrel Old Country Store Inc. (CBRL)**: Stock fell by 3.16% to $49.59, with a significant after-hours decline of 9.28% to $44.99 following a mixed fourth-quarter earnings report that missed earnings per share estimates [3] - **D-Wave Quantum Inc. (QBTS)**: Stock surged by 18.98% to $22.54, reaching a new 52-week high of $22.85 during the Qubits Japan 2025 conference [4] - **IonQ Inc. (IONQ)**: Stock rose by 5.11% to $65.44, hitting an all-time high of $66.39, with a notable after-hours spike of nearly 7.2% to $70.13 after a deal with the U.S. Department of Energy [5] - **Krispy Kreme Inc. (DNUT)**: Stock increased by 0.96% to $3.15, rising almost 3.8% to $3.27 in after-hours trading after FBI Director Kash Patel disclosed his purchase of the stock [6] - **Broadcom Inc. (AVGO)**: Stock dropped by 3.84% to $346.17, but spiked 1.3% to $350.70 in after-hours trading following the expansion of its partnership with Lloyds Banking Group [7] Stock Rankings - Cracker Barrel stock has a Momentum ranking in the 74th percentile according to Benzinga's Edge Stock Rankings [8]

Group 1 - The article discusses a short-term trading opportunity in Krispy Kreme (NASDAQ: DNUT), which yielded approximately 50% returns within a month due to heightened interest referred to as 'DORK fever' [1] - The author is an equity analyst and founder of Goulart's Restaurant Stocks, focusing on the U.S. restaurant industry, including various segments from quick-service to fine dining [1] - The research firm employs advanced financial modeling and sector-specific KPIs to identify hidden value in public equities, particularly in micro and small-cap stocks often overlooked by mainstream analysts [1] Group 2 - The analyst has a diverse background in finance and business management, holding an MBA in Controllership and Accounting Forensics, and a Bachelor's in Business Administration [1] - The research has been featured on multiple platforms, indicating a broad reach and credibility in the industry [1]

Core Insights - Krispy Kreme has launched a new product line called the Fall Fair Collection, featuring four doughnuts inspired by seasonal fairgrounds [1] Product Offering - The Fall Fair Collection includes a variety of doughnuts that capture the essence of classic fall fairs, appealing to customers' taste preferences [1] - The collection is available for a limited time at participating Krispy Kreme locations, enhancing the urgency for consumers to try the new offerings [1]

Core Viewpoint - Krispy Kreme is facing significant financial challenges, including declining revenue and profitability, high expenses, and a weak balance sheet, leading to a bearish outlook on its stock valuation [5][10][24]. Financial Performance - Krispy Kreme's revenue fell from a peak of $1.7 billion in 2023 to $1.5 billion in the trailing twelve months (TTM) ended 2Q25, indicating a year-over-year decline [10]. - The company's net operating profit after tax (NOPAT) decreased from $117 million in 2022 to $36 million in the TTM, with NOPAT margin dropping from 9% in 2019 to 2% in the TTM [10][11]. - Core Earnings fell from $47 million in 2022 to -$34 million in the TTM, highlighting a troubling trend in profitability [11]. Expense Management - Total operating expenses as a percentage of revenue increased from 96% in 2019 to 105% in the TTM ended 2Q25, indicating rising costs that outpace revenue [13]. - The company's high expenses are attributed to product and distribution costs, operating expenses, and marketing expenses [12][13]. Market Position and Valuation - Krispy Kreme's stock is considered significantly overvalued, with current price expectations implying unrealistic future profitability [5][25]. - To justify its current stock price of $3/share, Krispy Kreme would need to achieve $4.3 billion in revenue by 2034, nearly three times its TTM revenue [25]. Strategic Challenges - The company has struggled to maintain growth, evidenced by the termination of its partnership with McDonald's due to unsustainable cost structures [23][24]. - Krispy Kreme has also sold off assets, including its majority stake in Insomnia Cookies, to manage its balance sheet, which raises concerns about long-term sustainability [23][24][16]. Shareholder Impact - The number of shares outstanding has increased from 148 million in 2021 to 170 million in 2Q25, indicating potential dilution for existing shareholders [19]. - The company's total debt rose from $1.4 billion in 2021 to $1.8 billion in the TTM, contributing to a poor credit rating and financial instability [20][33].

Core Insights - Krispy Kreme is celebrating International Chocolate Day on September 13 by reintroducing its popular Chocolate Original Glazed® Doughnuts for a limited time [1] - The Chocolate Original Glazed® doughnuts will be available from Thursday through Sunday, offered by the dozen and individually for in-shop purchase, pickup, or delivery via Krispy [1] Company Strategy - The return of the Chocolate Original Glazed® doughnuts marks only the second time this year that Krispy Kreme has made this product available, indicating a strategic focus on limited-time offerings to drive customer interest and sales [1]

Core Viewpoint - Krispy Kreme's stock has faced significant declines due to poor sales, falling profits, and the cancellation of a partnership with McDonald's, leading to a 64% drop in stock value for 2025 [1][5] Group 1: Stock Performance - Shares of Krispy Kreme fell by as much as 10.2% before closing down 3.6% on the day [1] - The stock has plummeted 64% year-to-date [1] Group 2: Analyst Ratings and Opinions - A Wall Street analyst downgraded Krispy Kreme's stock rating from neutral to underweight, expressing skepticism about the company's turnaround plan [2] - J.P. Morgan analyst Rahul Krotthapalli highlighted risks associated with the turnaround plan, noting that current sales trends are negative and the company's organic growth rate declined by 0.8% last quarter [5][7] Group 3: Turnaround Plan Details - Krispy Kreme's turnaround plan includes cost-cutting measures related to the terminated McDonald's partnership and refranchising its international store footprint [3] - The plan also involves outsourcing logistics to a third party, which may reduce operational risks but also lower revenue and profits [4][5] Group 4: Financial Considerations - Krispy Kreme currently has $957 million in debt, which adds to the risk of its turnaround strategy [5] - While the focus on cost cuts and return on invested capital may lead to profitability improvements, the company remains growth-challenged, making it difficult to predict a successful turnaround [7]

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 ...

Group 1 - Krispy Kreme's stock has dropped 73% from its yearly peak, trading at 0.4 times trailing sales and 0.9 times book value, indicating severe financial distress [1] - The partnership with McDonald's, initiated in October 2022, was initially promising but ultimately led to significant financial burdens for Krispy Kreme [2][3] - The nationwide rollout of the McDonald's deal was halted in Q2 2025 due to high costs associated with the delivery program, which proved unsustainable on a larger scale [3] Group 2 - Krispy Kreme is currently reviewing its logistics setup to find more cost-effective solutions and is terminating hundreds of underperforming delivery contracts [5] - The company plans to replace more than half of the shuttered deals with higher-volume routes by the end of 2025, partnering with major retailers like Walmart, Costco, and Kroger [5][6] - While there is potential for a long-term turnaround if operations focus on profitable routes, the current sentiment among investors is disappointment due to the failed McDonald's experiment [6]

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)