Krispy Kreme 2025 Q3 Earnings Net Loss Widens 153.6% Despite Revenue Beat

Krispy Kreme (DNUT) reported mixed third-quarter results for fiscal 2025, with revenue falling short of expectations but adjusted profits exceeding forecasts. The company swung to a net loss of $0.11 per share, a stark reversal from a $0.23 profit a year ago, while revenue declined 1.2% to $375.30 million. CEO Josh Charlesworth highlighted progress in its turnaround plan, including store closures and cost-cutting, and outlined a focus on capital-light growth and international expansion.

Revenue

Krispy Kreme’s total revenue declined 1.2% year-over-year to $375.30 million, a 0.36% beat of the Zacks Consensus Estimate of $373.96 million. U.S. segment revenue fell 5.3% to $216.19 million, driven by the closure of underperforming locations and the sale of Insomnia Cookies. International revenue, however, rose 7.3% to $140.24 million, offsetting domestic declines. Market Development revenue dropped 9.2% to $18.87 million, reflecting strategic shifts in franchise and partnership models.

Earnings/Net Income

The company reported a net loss of $20.13 million, a 153.6% deterioration from the $37.57 million net income in 2024 Q3. Adjusted earnings per share (EPS) turned negative at $0.11, compared to $0.23 in the prior-year period. The EPS result reflects significant operational challenges and restructuring costs, underscoring the need for continued strategic adjustments.

Post-Earnings Price Action Review

The strategy of buying Krispy Kreme shares after its revenue beat and holding for 30 days showed favorable performance over the past three years, with a cumulative return of 32.5% and an average annual return of 10.5%. However, the strategy’s effectiveness wanes in quarters where revenue misses expectations, highlighting the importance of aligning investment decisions with both earnings and revenue outcomes.

CEO Commentary

CEO Josh Charlesworth emphasized progress in the turnaround plan, stating, “The third quarter marked a significant pivot as we implemented our comprehensive strategy focused on profitable U.S. expansion and capital-light international franchise growth.” The CEO highlighted the closure of 600 underperforming U.S. locations, the termination of the McDonald’s partnership, and operational efficiencies as key drivers of improved profitability.

Guidance

Krispy Kreme expects continued EBITDA growth and positive free cash flow in the remainder of 2025. The company aims to reduce capital expenditures, accelerate refranchising in international markets, and expand through high-traffic partnerships. CFO Raphael Duvivier noted plans to pay down debt and optimize the U.S. store base, targeting sequential EBITDA improvements and margin expansion.

Additional News

1. Strategic Store Closures: Krispy Kreme exited 600 unprofitable U.S. locations, focusing on high-margin hubs and partnerships with retailers like Walmart and Target.

2. McDonald’s Partnership Exit: The company ended its decade-long collaboration with McDonald’s, redirecting resources to its core fresh delivery model and international expansion.

3. Logistics Outsourcing: Over half of U.S. logistics are now managed by third-party providers, with full outsourcing expected by 2026 to reduce costs and improve efficiency.