Krispy Kreme Shares Fall Due to Poor Full-Year Outlook
The doughnut and coffeehouse chain Krispy Kreme experienced a sharp drop in its share price after missing second-quarter earnings estimates.
Aug. 18, 2022

Krispy Kreme (NASDAQ: DNUT) -- the doughnut and coffeehouse chain -- saw a drop in its share price after the company missed analyst expectations for both revenue and earnings in its second-quarter earnings report. This is the third time the company has missed analyst expectations out of the past four earnings reports, and this caused the share price to decline by 12.12% yesterday. So, how bad were the results?

What were the key points from Krispy Kreme's earnings report?

Krispy Kreme recorded revenues of $375.24 million, representing a year-over-year (YoY) growth rate of 7.5% -- 2.77% below the analyst's consensus of $385.94 million. Organic growth was driven by the performance and expansion of Krispy Kreme's omnichannel model and strong performance in Australia and Mexico, the Market Development segment, and Insomnia Cookies. 

The company's sales per hub -- locations where doughnuts are produced and processed for sale at any point of access -- saw strong growth during the quarter. Sales per hub in the U.S. and Canada increased by 22.2% YoY to $4.4 million due to a 9% increase in weekly sales per Delivered Fresh Daily door. Sales per international hub grew by 22.5% over the same period to $9.8 million due to a 19% growth rate in Global Points of Access. However, Krispy Kreme's e-commerce segment saw revenue as a percentage of net sales drop by 110 basis points to 17.5%, which may be partly responsible for the lower recorded profits.

The company recorded adjusted diluted earnings per share (EPS) of $0.08, 16.64% less than the analysts' forecast of $0.10 per share. Krispy Kreme's EPS in the quarter was also $0.06 per share lower than the results during the same period last year. The company claims this was primarily due to the number of diluted weighted average shares outstanding increasing from 135.9 million last year to 169.3 million this year due to the IPO. 

Krispy Kreme also lowered its full-year revenue and net income guidance from estimates made at the start of the year. Net revenue is forecast to reach $1.49 billion to $1.52 billion for the year, a downward revision from the earlier estimate of $1.53 billion to $1.56 billion. This includes impacts from foreign currency fluctuations. Guidance for net income was also revised from $65 million to $69 million to a range of $49 to $54 million. 

How did investors respond to Krispy Kreme's earnings report?

Investors were disappointed with the company's results, which caused the share price to drop by 12.12%, with a further drop of 0.47% in pre-market trading today. The consistent underperformance by the company appears to have rattled investors, who are now losing faith in its ability to generate reliable growth. This has caused the company's shares to fall over 33% lower than its IPO price of $19.12 in July last year. 



The Home of Successful Investing.

© 2023 MyWallSt Ltd. All rights reserved.


Services

Content

Social

Company

Support


This website is operated by MyWallSt Ltd (“MyWallSt”). MyWallSt is a publisher and a technology platform, not a registered broker-dealer or registered investment adviser, and does not provide investment advice. All information provided by MyWallSt Limited is of a general nature for information and education purposes, and you should not construe any such information as investment advice. MyWallSt Limited does not take your specific needs, investment objectives or financial situation into consideration, and any investments mentioned may not be suitable for you. You should always carry out your own independent verification of facts and data before making any investment decisions, as we cannot guarantee the accuracy or completeness of any information we publish and any opinions that we publish may be wrong and may change at any time without notice. If you are unsure of any investment decision you should seek a professional financial advisor. MyWallSt Limited is not a registered investment adviser and we do not provide regulated investment advice or recommendations. MyWallSt Limited is not regulated by the Central Bank of Ireland. MyWallSt Limited may provide hyperlinks to web sites operated by third parties. Your use of third party web sites and content, including without limitation, your use of any information, data, advertising, products, or other materials on or available through such web sites, is at your own risk and is subject to the third parties' terms of use.