Krispy Kreme reports US$33M loss in Q1 2025

USA – In the first quarter of 2025, Krispy Kreme reported a loss of US$33M, a significant increase from the US$8.5M loss in the same period last year.

Adjusted EBITDA fell to US$24M from US$58M, with the adjusted EBITDA margin dropping to 6.4%. The company Stated that it is investing for future growth while facing challenges from macroeconomic conditions, weather, and inflation.

Net revenue decreased by 15% to US$375M, down from US$443M, with US$64M of this decline attributed to the sale of a majority stake in Insomnia Cookies in the third quarter of fiscal 2024. Organic revenue saw a slight decrease of 1%.

As of March 30, the company had 17,982 global points of access, a 21% increase from 14,814 a year earlier.

Joshua Charlesworth, the president and CEO, mentioned that the long-term goal remains to reach 100,000 points of access.

However, in light of the current economic challenges, the company is focusing on reducing debt, improving cash flow, and pursuing only profitable growth based on sustainable revenue.

Krispy Kreme donuts were available in over 2,400 McDonald’s locations by the end of the first quarter on March 30, but the company announced on May 8 that it would not be adding any new McDonald’s locations in the second quarter.

Plans to expand the donut partnership to all McDonald’s in the U.S. were announced in March 2024, but demand for Krispy Kreme donuts at McDonald’s declined in the fourth quarter of 2024.

Due to economic uncertainties and the McDonald’s deployment schedule, the company has retracted its previous full-year forecast.

For the second quarter, Krispy Kreme anticipates net revenue between US$370M and US$385M, with adjusted EBITDA expected to be between US$30M and US$35M.

In the U.S., net revenue fell 20% to US$237M from US$296M in the same quarter last year, largely due to the sale of Insomnia Cookies, with organic revenue down 2.6%. Anticipated consumer softness outweighed a 35% increase in points of access.

In the international segment, net revenue decreased by 4.1% to US$120M, mainly due to an US$8.4M impact from foreign currency translation, although organic revenue rose by 1.5%.

Charlesworth noted that the company is exploring opportunities to re-franchise in Australia, New Zealand, Japan, Mexico, and the UK and Ireland, with proceeds aimed at strengthening the balance sheet.

He also highlighted that international franchise partners in both emerging markets like Brazil and France, as well as established markets like Korea and the Middle East, continue to perform well, demonstrating the benefits of local master franchise partnerships.

In the Market Development segment, net revenue decreased by 14% to US$19M, primarily due to a US$3.6M effect from franchise acquisitions and reduced equipment sales.

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