Krispy Kreme’s first quarter results drew a sharply negative market reaction, as the company’s revenue missed Wall Street expectations and margins contracted significantly year over year. Management pointed to persistent consumer softness in the U.S., a planned reduction in discounting, and the sale of Insomnia Cookies as the primary factors behind the quarter’s performance. CEO Joshua Charlesworth noted that the company is prioritizing profitable growth and highlighted early signs of success from a renewed focus on its original glazed doughnut and targeted marketing campaigns. Management took a notably self-critical stance, acknowledging operational inefficiencies and the need to simplify logistics and close underperforming distribution doors in order to improve profitability.
Is now the time to buy DNUT? Find out in our full research report (it’s free).
Krispy Kreme (DNUT) Q1 CY2025 Highlights:
- Revenue: $375.2 million vs analyst estimates of $383.8 million (15.3% year-on-year decline, 2.2% miss)
- Adjusted EPS: -$0.05 vs analyst estimates of -$0.05 (in line)
- Adjusted EBITDA: $23.98 million vs analyst estimates of $29.26 million (6.4% margin, 18.1% miss)
- Revenue Guidance for Q2 CY2025 is $377.5 million at the midpoint, below analyst estimates of $391.5 million
- EBITDA guidance for Q2 CY2025 is $32.5 million at the midpoint, below analyst estimates of $41.83 million
- Operating Margin: -5.4%, down from 2.7% in the same quarter last year
- Locations: 17,982 at quarter end, up from 14,814 in the same quarter last year
- Market Capitalization: $456 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Krispy Kreme’s Q1 Earnings Call
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Rahul Krotthapalli (JPMorgan) asked about capital expenditure changes and the McDonald’s rollout pause. CFO Jeremiah Ashukian explained CapEx is being more tightly controlled, focusing only on high-return investments, while CEO Joshua Charlesworth clarified the McDonald’s pause was a joint decision to ensure future growth is profitable.
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Daniel Guglielmo (Capital One Securities) questioned the company’s aggressiveness around closing underperforming U.S. locations. Ashukian stated Krispy Kreme may exit 5–10% of U.S. doors this year to drive profitability, and described a deliberate approach to refranchising international markets, with proceeds earmarked for debt reduction.
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Isaiah Austin (Bank of America, for Sara Senatore) probed the reasons for weak McDonald’s demand and profitability concerns. Charlesworth said initial momentum faded after marketing ended, and the focus now is on improving economics and operations before resuming expansion.
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Andrew Wolf (no firm specified) asked about the lingering impact of a prior cybersecurity incident on operational inefficiencies. Ashukian replied that most issues have been resolved, with improved efficiency expected going forward.
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Bill Chappell (Truist Securities) sought clarity on the speed and rationale of the McDonald’s pause, as well as implications for network investments. Charlesworth reiterated that decisive action was needed to ensure profitable growth and that new production hubs will continue to open to support other national partners.
Catalysts in Upcoming Quarters
In the next few quarters, the StockStory team will be monitoring (1) whether the company can reignite sustained demand in its U.S. retail and McDonald’s channels, (2) the execution and cost savings from fully outsourcing logistics and rationalizing underperforming locations, and (3) progress on refranchising international markets to support deleveraging efforts. Additionally, we will watch for the impact of new product campaigns and expanded retail partnerships on consumer engagement and profitability.
Krispy Kreme currently trades at $2.69, down from $4.31 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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