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Investing.com -- Krispy Kreme , Inc. (NASDAQ:DNUT) shares tumbled about 5% on Thursday after the doughnut chain reported a wider-than-expected second quarter loss as it grapples with the aftermath of its terminated McDonald’s (NYSE:MCD) partnership and implements a comprehensive turnaround plan.
The company posted an adjusted loss of $0.15 per share for the second quarter, significantly missing analyst expectations of a $0.04 loss.
Revenue came in slightly above estimates at $379.8 million compared to the consensus of $378.66 million, though this represented a 13.5% decline from the same period last year.
Organic revenue fell 0.8% YoY.
Krispy Kreme’s quarterly results were heavily impacted by its recently terminated partnership with McDonald’s USA, which ended July 2.
The company recorded non-cash goodwill and asset impairment charges totaling $406.9 million, contributing to a GAAP net loss of $441.1 million.
"Our results for the second quarter primarily reflect the impact of unsustainable operating costs relative to unit demand in the McDonald’s USA partnership," said CEO Josh Charlesworth.
"We are quickly removing our costs related to the McDonald’s partnership and growing fresh delivery through profitable, high-volume doors with major customers."
Adjusted EBITDA plummeted 63.3% to $20.1 million, with margins shrinking to 5.3% from 12.5% a year earlier. The company’s global points of access increased 14.3% to 18,113, though this figure included approximately 2,400 McDonald’s locations that were closed after the quarter ended.
Krispy Kreme has implemented a turnaround plan focused on refranchising international markets, improving return on invested capital, expanding margins through operational efficiency, and driving sustainable growth in the U.S.
The company has already sold its remaining stake in Insomnia Cookies for $75 million to reduce debt and halted its quarterly dividend.
As part of its restructuring efforts, Krispy Kreme is in discussions to reduce its ownership stake in its Western U.S. joint venture and has initiated processes to refranchise markets including Australia, New Zealand, Japan, Mexico, and the UK.
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