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Investing.com - Krispy Kreme (NASDAQ:DNUT) shares tumbled by more than 24% on Tuesday after the donut maker’s annual sales and profit guidance missed analysts’ expectations.
The group said it expects full-year net revenue to be between $1.55 billion and $1.65 billion, compared with Bloomberg consensus estimates of $1.76 billion. Adjusted earnings before interest, tax, depreciation and amortization are also tipped to be $180 million to $200 million, below projections of $233.1 million.
In a statement, CEO Josh Charlesworth noted that, along with an ongoing restructuring effort aimed at maximizing "profitable U.S. expansion and capital-light international growth," the company has begun to evaluate refranchising certain overseas markets.
"I believe these changes will drive capital efficient growth," Charlesworth said.
Meanwhile, total revenue in the fourth quarter sank by 10% versus the year-ago period to $404 million. Consensus expectations had seen the number at $414 million.
Adjusted core income also slumped by 28% year-on-year to $45.9 million in the three months ended on December 29, missing forecasts of $58.7 million.
Krispy Kreme had previously warned in December that unauthorized activity on a section of its information technology systems had impacted its online ordering operations in the U.S. Online ordering, retail shops, and core business functions are now fully operational, the business said.
The breach dented fourth-quarter results by an estimated $11 million, the company said. Meanwhile, the sale of a majority ownership stake in bakery firm Insomnia Cookies in the third quarter led to a $101 million impact on Krispy Kreme’s returns, it added.
Following the results, Truist Securities analyst Bill Chappell lowered his price target to $12 from $15 while maintaining a Buy rating. The analyst thinks the stock may be overreacting today.
On the guidance, the analyst said while it was below the Street, "it was far from the disaster that the stock action seemingly reflects," noting the company still sees 5-7% organic sales growth.
Further, the analyst stated the McDonald’s (NYSE:MCD) partnership is still moving forward, with 6,000 stores expected by year-end. "The partnership is still opening new retail relationships such as the expansion at Walmart (NYSE:WMT) and rollout out at Target (NYSE:TGT)," the analyst added. "We continue to believe the ability to expand into retailers like Walmart, Costco (NASDAQ:COST) and Target the latter two which have not been prior retail partners, will have an equal if not greater impact on sales growth over the next two years as the MCD rollout," he said.
(Scott Kanowsky contributed to this report)