Why Doughnut Company Krispy Kreme's Shares Are Getting Battered Today

Krispy Kreme Inc DNUT shares are trading lower after the company delivered third-quarter FY23 earnings.

DNUT reported third-quarter FY23 sales growth of 7.9% year-on-year to $407.37 million, missing the analyst consensus estimate of $413.93 million.

Organic revenue growth of 9.6%, led by the U.S., which delivered 10.2% organic growth driven by growth across all sales channels, including Delivered Fresh Daily (DFD) doors, Doughnut Shops and Cookie Bakeries, and Ecommerce.

Revenue in the U.S. segment climbed 5.4% Y/Y to $260.2 million, the International segment grew 15.4% to $106.1 million, and Market Development increased 5.9% to $41.1 million. Ecommerce constituted 18.6% of retail sales.

Operating loss for the quarter totaled $(2.1) million versus a loss of $(1.02) million last year.

Adjusted EBITDA increased 13.5% Y/Y to $43.7 million, and the EBITDA margin expanded 50 basis points to 10.7%.

Adjusted EPS of $0.03 missed the consensus of $0.06.

The company held $26.1 million in cash and equivalents as of October 1, 2023. Operating cash flow for nine months totaled $44 million.

"We are also excited about our continued partnership with McDonald's Corporation MCD, which we believe has validated the attractiveness of the quick-service restaurant channel. While nothing has been finalized, we are in advanced discussions about expanding the partnership and are making investments in the U.S. that reflect our confidence in further scaling our Delivered Fresh Daily network," said CEO Mike Tattersfield.

Outlook: Krispy Kreme said it continues to trend toward the middle to the higher end of the revenue range of $1.65 billion-$1.68 billion (consensus $1.69 billion) and Adjusted EBITDA range of $205 million-$215 million.

The company continues to see FY23 adjusted EPS of $0.31-$0.34 versus the Street view of $0.32.

Price Action: DNUT shares are trading lower by 9% at $12.23 on the last check Thursday.