Krispy Kreme, Inc. (NASDAQ:DNUT) shares are trading lower in the premarket session on Thursday after the company reported a second-quarter adjusted earnings per share loss of 15 cents, missing the Street view of a three-cent loss.
Quarterly sales of $379.77 million (down 13.5% year over year) outpaced the analyst consensus estimate of $378.09 million.
Organic revenue declined 0.8%.
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Sales declined primarily due to the $64.2 million reduction resulting from the sale of a majority stake in Insomnia Cookies Holdings in the third quarter of fiscal 2024. The company sold its remaining ownership stake in Insomnia Cookies during the second quarter of fiscal 2025.
In the U.S. segment, net revenue declined by 20.5%, while in the International segment, organic revenue grew by 5.9%, driven primarily by growth in Canada, Japan, and Mexico.
“Our results for the second quarter primarily reflect the impact of unsustainable operating costs relative to unit demand in the McDonald’s USA partnership, which ended July 2, 2025,” said Krispy Kreme CEO Josh Charlesworth.
On June 24, the company announced that, after careful consideration, Krispy Kreme and McDonald’s Corporation (NYSE:MCD) USA jointly decided to end their partnership and terminate their Business Relationship Agreement, effective July 2, 2025.
The company reported adjusted EBITDA of $20.1 million, representing a 63.3% year-over-year decrease. The Adjusted EBITDA margin in the quarter under review decreased to 5.3% from 12.5% in the year-ago period, primarily driven by the impact of the now-ended McDonald’s USA partnership and lower transaction volumes, which affected operating leverage.
The company exited the quarter with cash and equivalents worth $21.264 billion, lower than $28.962 billion as of December 29, 2024.
Four-Pronged Strategy for Profitable Growth
“Looking ahead, we have implemented a comprehensive turnaround plan aimed at unlocking our two biggest opportunities: profitable U.S. expansion and capital-light international franchise growth,” Charlesworth said.
Krispy Kreme unveiled a comprehensive turnaround plan designed to deleverage the balance sheet and lay the foundation for sustainable, profitable growth.
First, the company will accelerate refranchising in key international markets and restructure its Western U.S. joint venture to enhance financial flexibility.
Second, by maximizing return on invested capital—leveraging existing assets and deepening franchisee partnerships—Krispy Kreme aims to reduce its capital intensity.
Third, it plans to expand margins through operational efficiencies, notably by outsourcing U.S. logistics. Finally, the company will drive growth across the U.S. by focusing exclusively on revenue streams that are both sustainable and profit-accretive.
What’s Next?
The company stated that it would eliminate costs associated with its McDonald’s partnership and expand fresh‐delivery operations through profitable, high‐volume outlets with major customers.
“We expect to begin recouping profitability in the third quarter,” Charlesworth said.
Price Action: DNUT shares are trading lower by 14.3% to $2.92 premarket at last check on Thursday.
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