Hack Attack: Krispy Kreme Faces Cyber Incident, Digital Sales Suffer Blow

Krispy Kreme, Inc. DNUT shares are trading lower on Wednesday.

In an exchange filing, the company said it is facing operational disruptions after an unauthorized cyber incident was detected on its IT systems on November 29.

The company, however, immediately launched an investigation, working closely with top cybersecurity experts to contain and remediate the breach.

Despite the disruption, Krispy Kreme's 400 U.S. locations remain open for in-person orders, and deliveries to retail and restaurant partners, including nearly 2,000 McDonald's locations, have not been affected, CNN reports.

However, some parts of the U.S. are experiencing issues with online ordering, and the company is actively working to restore its digital services, the filing read.

Also Read: Krispy Kreme Falters In Q3: Earnings Miss, Sales Slide, And Outlook Dims Post-Insomnia Cookies Sale

The investigation is ongoing, and the full extent of the breach is still unclear. The company has notified federal law enforcement and is continuing efforts to mitigate the impact on its operations.

Krispy Kreme has acknowledged that the cyber incident is likely to have a material impact on its business, particularly in the short term.

The costs associated with the breach, including lost revenue from disrupted digital sales, fees for cybersecurity experts, and the expense of restoring impacted systems, are expected to significantly affect the company's financials.

However, Krispy Kreme said it holds cybersecurity insurance, which is expected to cover some of these costs.

Despite these challenges, the company has emphasized that it does not anticipate the incident will have a long-term effect on its overall financial health.

Krispy Kreme also noted that its daily fresh deliveries to retail and restaurant partners, including grocery stores, have remained uninterrupted.

This disruption comes on the heels of a busy year for Krispy Kreme, which recently expanded its partnership with McDonald's and sold a majority stake in its Insomnia Cookies brand to private equity firms, CNN adds. These moves reflect the company's continued focus on delivering fresh doughnuts to consumers worldwide.

Price Action: DNUT shares are trading lower by 2.87% to $9.82 at last check Wednesday.

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