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From Dough to No: Krispy Kreme’s Stock Gets Deep-Fried

Krispy Kreme Faces Revenue Decline, Cybersecurity Fallout, and Weak Guidance as Investors React

•• 3 Min
From Dough to No: Krispy Kreme’s Stock Gets Deep-Fried

Krispy Kreme Inc. (NASDAQ: DNUT) is facing a fresh wave of investor anxiety as its stock nosedived more than 18% in premarket trading on Tuesday. The iconic doughnut maker reported disappointing fourth-quarter results and a weaker-than-expected full-year outlook, triggering concerns about the company’s financial trajectory.

Revenue Miss and Cybersecurity Fallout

The company’s revenue fell 10.4% year-over-year to $404 million, missing analysts’ expectations of $414 million. The shortfall was largely attributed to Krispy Kreme’s partial sale of Insomnia Cookies, which shaved $101 million off total revenue. Adding to the turbulence, a 2024 cybersecurity incident disrupted online orders and cost the company an estimated $11 million.

Krispy Kreme revealed in a December regulatory filing that hackers had infiltrated parts of its IT systems, causing widespread disruptions in the U.S. The company has since taken steps to enhance its cybersecurity measures, but the financial damage was already done.

From Profit to Loss: A Tough Quarter

Krispy Kreme swung to a net loss of $22.4 million (13 cents per share) for the quarter, a stark contrast to the prior year’s modest profit of $2.6 million (2 cents per share). Adjusted earnings came in at just 1 cent per share, falling far short of the FactSet consensus estimate of 10 cents per share.

Despite these setbacks, the company highlighted an 18th consecutive quarter of organic revenue growth, with annual organic sales rising 5% to $1.658 billion. CEO Josh Charlesworth reassured investors that, excluding the cybersecurity incident, the company’s performance was largely in line with expectations.

Strategic Overhaul in Motion

In response to the financial headwinds, Krispy Kreme is restructuring its management teams and exploring new strategies for cost efficiency. The company is evaluating the refranchising of certain international markets and is preparing to outsource U.S. logistics.

“I believe these changes will drive capital-efficient growth as we continue our transformation into a bigger and better Krispy Kreme,” said Charlesworth.

Expanding Retail Footprint with McDonald’s

Krispy Kreme continues to expand its reach through a strategic partnership with McDonald’s (NYSE: MCD). More than 1,900 McDonald’s locations now receive daily deliveries of Krispy Kreme doughnuts, significantly boosting accessibility. By the end of 2024, fresh Krispy Kreme products were available at 17,557 locations—up from just 3,410 the previous year.

Weak 2025 Guidance Adds to Investor Concerns

The company’s outlook for fiscal 2025 did little to restore investor confidence. Krispy Kreme expects full-year revenue between $1.55 billion and $1.65 billion, well below analysts’ projections of $1.76 billion. Adjusted earnings guidance of just 4 to 8 cents per share was also a sharp disappointment compared to Wall Street’s forecast of 30 cents per share.

The Road Ahead for Krispy Kreme

Krispy Kreme is at a crossroads. While the company continues to expand its distribution and build strategic partnerships, financial setbacks and operational hurdles are weighing heavily on investor sentiment. With a challenging 2025 forecast ahead, Krispy Kreme will need to prove that its restructuring efforts and cost-cutting measures can deliver long-term profitability.

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