Krispy Kreme shares plummeted more than 20% on Tuesday, hitting an all-time low after the donut maker reported disappointing results and guidance. The company’s performance was impacted by a cybersecurity incident in December and significant restructuring efforts. In the fourth quarter, Krispy Kreme posted adjusted earnings of $0.01 per share on revenue of $404 million, a 10% decline from the previous year.
Analysts had expected earnings of $0.09 per share on revenue of $411.1 million. The company attributed the revenue drop primarily to the sale of its majority stake in Insomnia Cookies in the third quarter and the December cyberattack, which had an $11 million negative impact. The cybersecurity breach led to operational disruptions, including online ordering issues in the U.S.
CEO Josh Charlesworth noted that without the cybersecurity issue, the performance was “largely in line with our expectations.” He added that Krispy Kreme has restructured its management teams to focus on profitable U.S. expansion and international growth.
The company plans to outsource U.S. logistics and has started evaluating the refranchising of certain international markets.
Shares drop after Q4 earnings miss
For the full year, Krispy Kreme forecasts revenue between $1.55 billion and $1.65 billion and adjusted EBITDA between $180 million and $200 million, falling short of analysts’ estimates of $1.76 billion and $235 million, respectively.
Despite the challenges, Charlesworth remains optimistic about the company’s future. “Our core strategy is working, which is to get those awesome, fresh donuts out to more people. We really focused on the milestones we achieved in 2024 and 2025 to do that in the US through national distribution partners and internationally with franchise partners,” he stated.
Krispy Kreme’s partnership with McDonald’s is aiding its expansion, with plans to distribute donuts from 1,900 McDonald’s outlets by the end of 2024 and aiming for about 6,000 outlets by the end of 2025. Meanwhile, the company is considering the refranchising of its international operations after speculation around selling its franchise in Australia and New Zealand. As Krispy Kreme navigates through its current financial hurdles, the company remains committed to growth and innovation in both domestic and international markets.
However, investors will need to weigh these expansion efforts and partnerships against the company’s current financial performance and future projections.