Krispy Kreme Reports Second Quarter 2025 Financial Results and Announces Turnaround Plan

Turnaround plan to deleverage the balance sheet and drive sustainable, profitable growth

Krispy Kreme, Inc. (NASDAQ:DNUT) ("Krispy Kreme", "KKI", or the "Company") today reported financial results for the quarter ended June 29, 2025, and outlined a turnaround plan designed to deleverage the balance sheet and drive sustainable, profitable growth.

Second Quarter Highlights (vs Q2 2024)

• Net revenue of $379.8 million
• Organic revenue declined 0.8%
• GAAP net loss of $441.1 million, including non-cash goodwill and other asset impairment charges totaling $406.9 million
• Adjusted EBITDA of $20.1 million
• Cash used for operating activities of $32.5 million
• Global Points of Access ("POA") increased 2,260, or 14.3%, to 18,113 which includes approximately 2,400 McDonald's doors that were closed subsequent to Q2

"Our results for the second quarter primarily reflect the impact of unsustainable operating costs relative to unit demand in the McDonald's USA partnership, which ended July 2, 2025. We are quickly removing our costs related to the McDonald's partnership and growing fresh delivery through profitable, high-volume doors with major customers. We expect to begin recouping profitability in the third quarter."

"Looking ahead, we have implemented a comprehensive turnaround plan aimed at unlocking our two biggest opportunities: profitable U.S. expansion and capital-light international franchise growth. This plan is designed to reduce leverage and deliver sustainable, profitable growth through refranchising, improving returns on capital, expanding margins, and driving sustainable, profitable U.S. growth," said Krispy Kreme CEO Josh Charlesworth.

Turnaround Plan

The Company has implemented a comprehensive turnaround plan to deleverage the balance sheet and deliver sustainable, profitable growth through a focus on the following four components:

1. Refranchising: Improve financial flexibility through refranchising international markets and restructuring the joint venture in the Western U.S.
2. Driving Return on Invested Capital: Reduce capital intensity by using existing assets and focusing on franchisee development
3. Expanding Margins: Expand margins through greater operational efficiency, including outsourcing U.S. logistics
4. Driving Sustainable, Profitable Growth: Pursue U.S. growth based upon sustainable and profitable revenue streams

Second Quarter 2025 Consolidated Results (vs Q2 2024)

Krispy Kreme's results reflect the work needed to maximize U.S. expansion and wider adoption of the capital-light international franchise model. Net revenue was $379.8 million in the second quarter of 2025, a decline of approximately 13.5% or $59.0 million, primarily due to the $64.2 million reduction associated with the sale of a majority stake in Insomnia Cookies Holdings, LLC ("Insomnia Cookies") in the third quarter of fiscal 2024. The Company sold its remaining ownership stake in Insomnia Cookies during the second quarter of fiscal 2025. Organic revenue declined by $2.9 million, or approximately 0.8%, as growth in Global Points of Access and Delivered Fresh Daily ("DFD") revenues were more than offset by planned reduced discounting and expected consumer softness leading to a decline in doughnut shop transaction volume.

GAAP Net Loss was $441.1 million, compared to the prior year net loss of $4.9 million, which included non-cash goodwill and other asset impairment charges totaling $406.9 million in the second quarter of fiscal 2025. GAAP diluted loss per share was $2.55, compared to a loss of $0.03 in the same quarter last year.

Adjusted EBITDA declined to $20.1 million. Adjusted EBITDA Margin declined to 5.3% primarily driven by the impact of our now-ended McDonald's USA partnership, and lower transaction volumes affecting operating leverage.

Adjusted Net Loss, diluted was $25.3 million for the quarter and Adjusted Diluted loss per share was $0.15.

Second Quarter 2025 Segment Results (vs Q2 2024)

U.S.: In the U.S. segment, net revenue declined by $59.2 million, or approximately 20.5%, primarily due to the $64.2 million reduction associated with the sale of a majority stake in Insomnia Cookies in the third quarter of fiscal 2024. Retail transaction declines related to expected consumer softness, in addition to strategic door closures, led to an organic revenue decline of $6.9 million, or approximately 3.1%. Average revenue per door per week ("APD") declined to $525, primarily driven by the impact of our now-ended McDonald's USA partnership, with Sales Per Hub of $4.9 million.

U.S. Adjusted EBITDA decreased by $22.7 million, or 69.6%, primarily driven by the sale of a majority stake in Insomnia Cookies in the third quarter of fiscal 2024, the adverse impact of our now-ended McDonald's USA partnership and lower transaction volumes affecting operating leverage.

International: In the International segment, organic revenue grew by $7.4 million, or approximately 5.9%, driven primarily by growth in Canada, Japan and Mexico. International net revenue grew by $7.5 million, or approximately 6.0%, with foreign currency translation impacts of $1.4 million. Points of Access declined by 3.3% due to strategic door closures in Japan and Mexico to optimize the DFD network.

International segment Adjusted EBITDA declined by $3.4 million, or 15.9%, with a margin decline of 360 basis points to 13.7% as strength in Japan was offset by the ongoing turnaround in the U.K. Importantly, U.K. margin improved sequentially, and the Company looks forward to continued progress from the new leadership team in that market.

Market Development: In the Market Development segment, net revenue declined by $7.3 million, or approximately 30.2%, reflecting a $3.9 million impact of franchise acquisitions. Market Development organic revenue declined by approximately 14.2%, as growth in markets such as France, Brazil, and the Middle East was more than offset by timing of product and equipment sales to franchisees.

Market Development Adjusted EBITDA decreased by $3.9 million, or 30.5%, with margin of 52.9%, down 20 basis points.

Balance Sheet and Capital Expenditures

During the first half of 2025, the Company invested $54.1 million, or 7.2% of net revenue, in capital expenditures, primarily in the U.S. to support previously committed initiatives aimed at bringing doughnuts closer to our consumers through nationwide expansion. This includes a new production hub that will be the first Hot Light Theater Shop in Minneapolis, MN opening later this year. Aside from this strategic location, the Company has since reduced investment in new capacity in favor of leveraging existing excess capacity for growth.

During the second quarter of 2025, the Company also amended its existing credit agreement to establish incremental term loan commitments in an aggregate principal amount of $125.0 million. The Company used the incremental capacity primarily to pay down its revolving credit facility. The amendment carries identical terms as the existing credit agreement regarding maturity date and interest rates.

As of June 29, 2025, the Company has total available liquidity of $243.8 million, which includes $21.3 million of cash and cash equivalents as well as undrawn committed capacity of $222.5 million under its credit facilities. The Company was in compliance with all financial covenants as of June 29, 2025.

Capital Allocation

As previously announced, the Company halted the quarterly cash dividend to holders of the Company's common stock. In the second quarter of 2025 the Company also sold its remaining ownership stake in Insomnia Cookies, with aggregate cash proceeds of $75 million used to reduce debt.

The Company is in active discussions to restructure its well-established joint venture with the WKS Restaurant Group ("WKS") in the Western U.S., and expects to reduce its ownership stake. As previously announced, the Company has initiated the process to refranchise certain markets including Australia and New Zealand, Japan, Mexico, and the U.K. and Ireland. These efforts will provide the Company with greater financial flexibility, enabling debt paydown and focus on profitable, high return growth.

McDonald's USA Partnership

On June 24, 2025, the Company announced that, after careful consideration, Krispy Kreme and McDonald's USA jointly decided to end their partnership and terminate their Business Relationship Agreement (the "Agreement"), effective July 2, 2025. The efforts to bring Krispy Kreme's operating costs in line with unit demand were unsuccessful. The Company is focused on growing fresh delivery with profitable, high-volume retail points of distribution.

Goodwill and Other Asset Impairments

During the second quarter of 2025, management identified impairment indicators that required a quantitative assessment of goodwill. These indicators included that during the first half of 2025, the Company experienced a decline in its stock price and market capitalization, which became significant and sustained during the second quarter. Additionally, current operating results and updates to management's internal forecasts were below previous forecasts. After completing its quantitative impairment test, management concluded that the estimated fair values of the U.S., U.K. and Ireland, and Australia and New Zealand reporting units had declined below their carrying values and management recognized a cumulative, non-cash partial goodwill impairment charge of $356.0 million (gross of income taxes) in the second quarter of 2025.

Additionally, in response to management's updated forecasts and the termination of the Agreement with McDonald's USA during the second quarter of 2025, Krispy Kreme recorded long-lived asset non-cash impairment charges of $22.1 million and lease impairment and termination costs of $28.9 million. These impairment charges, along with the partial goodwill impairment, are included in Goodwill and other asset impairments in the Condensed Consolidated Statements of Operations.

The Goodwill and other asset impairments do not have an impact on the Company's compliance with the financial covenants under the Company's debt arrangements.

Definitions

The following definitions apply to terms used throughout this press release:

• Global Points of Access: Reflects all locations at which fresh doughnuts can be purchased. We define global points of access to include all Hot Light Theater Shops, Fresh Shops, Carts and Food Trucks, DFD Doors (which includes DFD branded cabinets and merchandising units within high traffic grocery and convenience stores, quick service or fast casual restaurants ("QSR"), club memberships, and drug stores) and Cookie Bakeries (through the date of the Insomnia Cookies deconsolidation), and other points at which fresh doughnuts can be purchased at both Company-owned and franchise locations as of the end of the applicable reporting period. We monitor Global Points of Access as a metric that informs the growth of our omni-channel presence over time and believe this metric is useful to investors to understand our footprint in each of our segments and by asset type.
• Hubs: Reflects locations where fresh doughnuts are produced and processed for sale at any point of access. We define Hubs to include self-sustaining Hot Light Theater Shops and Doughnut Factories, at both Company-owned and franchise locations as of the end of the applicable reporting period.
• Hubs with Spokes: Reflects Hubs currently producing product for other Fresh Shops, Carts and Food Trucks, or DFD Doors, and excludes Hubs not currently producing product for other shops, Carts and Food Trucks, or DFD Doors.
• Sales Per Hub: Sales per Hub equals Fresh Revenues from Hubs with Spokes, divided by the average number of Hubs with Spokes at the end of each of the five most recent quarters.
• Fresh Revenues from Hubs with Spokes: Fresh Revenues is a measure focused on the Krispy Kreme doughnut business and includes product sales generated from our Hot Light Theater Shops, Fresh Shops, Carts and Food Trucks, DFD Doors, and digital channels and excludes sales from Cookie Bakeries and Branded Sweet Treats (through the date of the Insomnia cookies deconsolidation and Branded Sweet Treats exit, respectively). Fresh Revenues from Hubs with Spokes equals the Fresh Revenues derived from Hubs with Spokes.
• Free Cash Flow: Defined as cash provided by operating activities less purchases of property and equipment.

Conference Call

Krispy Kreme will host a public conference call and webcast at 8:30 AM Eastern Time today to discuss its results for the second quarter of 2025. To register for the conference call, please use this link. After registering, confirmation will be sent through email, including dial-in details and unique conference call codes for entry. To listen to the live webcast and Q&A, visit the Krispy Kreme investor relations website at investors.krispykreme.com. A replay of the webcast will be available on the website within 24 hours after the call. This earnings press release and related materials will also be available on the investor relations section of the Company's website.

Category: Financial News

Investor Relations and Media

ICR for Krispy Kreme, Inc.

[email protected]

About Krispy Kreme

Headquartered in Charlotte, N.C., Krispy Kreme is one of the most beloved and well-known sweet treat brands in the world. Our iconic Original Glazed^® doughnut is universally recognized for its hot-off-the-line, melt-in-your-mouth experience. Krispy Kreme operates in more than 40 countries through its unique network of fresh doughnut shops, partnerships with leading retailers, and a rapidly growing digital business. Our purpose of touching and enhancing lives through the joy that is Krispy Kreme guides how we operate every day and is reflected in the love we have for our people, our communities and the planet. Connect with Krispy Kreme Doughnuts at www.KrispyKreme.com, or on one of its many social media channels, including www.Facebook.com/KrispyKreme and www.X.com/KrispyKreme.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of forward-looking terminology, including terms such as "plan," "believe," "may," "continue," "guidance," "could," "will," "should," "would," "anticipate," "estimate," "expect," "intend," "objective," "seek," "strive," "look forward," or, in each case, the negatives of these words, comparable terminology, or similar references to future periods; however, statements may be forward-looking whether or not these terms or their negatives are used. Forward-looking statements are not a representation by us that the future plans, estimates, or expectations contemplated by us will be achieved. Our actual results could differ materially from the forward-looking statements included in this press release. We consider the assumptions and estimates on which our forward-looking statements are based to be reasonable, but they are subject to various risks and uncertainties relating to our operations, financial results, financial conditions, business, prospects, future plans and strategies, projections, liquidity, the economy, and other future conditions. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors could cause our actual results to differ materially from those contained in forward-looking statements including, without limitation: food safety issues, including risks of food-borne illnesses, tampering, contamination, and cross-contamination; impacts from our 2024 cybersecurity incident or any other material failure, inadequacy, or interruption of our information technology systems, including breaches or failures of such systems or other cybersecurity or data security-related incidents; any harm to our reputation or brand image; negative impacts on our business due to changes in consumer spending habits, consumer preferences, or demographic trends; changes in the cost of raw materials and other commodities, including due to import and export requirements (including tariffs), inflation, or foreign exchange rates; our ability to execute on our omni-channel business strategy; our significant indebtedness and our ability to meet the financial and other covenants under our credit facilities; regulatory investigations, enforcement actions, or material litigation; and other risks and uncertainties described under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 29, 2024, filed by us with the Securities and Exchange Commission (the "SEC") and in other filings we make from time to time with the SEC. These forward-looking statements are made only as of the date of this document, and we undertake no obligation to publicly update or revise any forward-looking statement whether as a result of new information, future events, or otherwise, except as may be required by law.

Non-GAAP Measures

This press release includes certain financial information that is not presented in conformity with accounting principles generally accepted in the U.S. ("GAAP"). These non-GAAP financial measures include organic revenue growth/(decline), Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted Net (Loss)/Income, Diluted, Adjusted EPS, Free Cash Flow, Net Debt, Fresh Revenue from Hubs with Spokes and Sales per Hub. These non-GAAP financial measures are not standardized, and it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names, limiting their usefulness as comparative measures. Other companies may calculate similarly titled financial measures differently than we do or may not calculate them at all. Additionally, these non-GAAP financial measures are not measurements of financial performance under GAAP or a substitute for results reported under GAAP. In order to facilitate a clear understanding of our consolidated historical operating results, we urge you to review our non-GAAP financial measures in conjunction with our historical consolidated financial statements and notes thereto filed with the SEC and not to rely on any single financial measure.

See "Reconciliation of Non-GAAP Financial Measures" below for a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measure.

Krispy Kreme, Inc.

Reconciliation of Non-GAAP Financial Measures (Unaudited)

(in thousands, except per share amounts)

We define "Adjusted EBITDA" as earnings before interest expense, net, income tax expense, and depreciation and amortization, with further adjustments for share-based compensation, certain strategic initiatives, acquisition and integration expenses, and certain other non-recurring, infrequent, or non-core income and expense items. Adjusted EBITDA is a principal metric that management uses to monitor and evaluate operating performance and provides a consistent benchmark for comparison across reporting periods. "Adjusted EBITDA margin" reflects Adjusted EBITDA as a percentage of net revenues.

We define "Adjusted EBIT" as earnings before interest expense, net and income tax expense, with further adjustments for share-based compensation, certain strategic initiatives, acquisition and integration expenses, amortization of acquisition-related intangibles, and certain other non-recurring, infrequent, or non-core income and expense items. Adjusted EBIT is a principal metric that management uses to monitor and evaluate operating performance and provides a consistent benchmark for comparison across reporting periods.

We define "Adjusted Net (Loss)/Income, Diluted" as net loss attributable to common shareholders, adjusted for share-based compensation, certain strategic initiatives, acquisition and integration expenses, amortization of acquisition-related intangibles, the tax impact of adjustments, and certain other non-recurring, infrequent, or non-core income and expense items. "Adjusted EPS" is Adjusted Net (Loss)/Income, Diluted converted to a per share amount.

Adjusted EBITDA, Adjusted EBIT, Adjusted Net (Loss)/Income, Diluted, and Adjusted EPS have certain limitations, including adjustments for income and expense items that are required by GAAP. In evaluating these non-GAAP measures, you should be aware that in the future we will incur expenses that are the same as or similar to some of the adjustments in this presentation, such as share-based compensation. Our presentation of these non-GAAP measures should not be construed to imply that our future results will be unaffected by any such adjustments. Management compensates for these limitations by relying on our GAAP results in addition to using these non-GAAP measures supplementally.

Organic revenue growth measures our revenue growth trends excluding the impact of acquisitions, divestitures, and foreign currency, and we believe it is useful for investors to understand the expansion of our global footprint through internal efforts. We define "organic revenue growth" as the growth in revenues, excluding (i) acquired shops owned by us for less than 12 months following their acquisition, (ii) the impact of foreign currency exchange rate changes, (iii) the impact of shop closures related to restructuring programs, (iv) the impact of the divestiture of Insomnia Cookies, and (v) revenues generated during the 53^rd week for those fiscal years that have a 53^rd week based on our fiscal calendar.

Fresh Revenues from Hubs with Spokes and Sales per Hub are defined above.

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Investor Relations and Media

ICR for Krispy Kreme, Inc.

[email protected]