Krispy Kreme (DNUT) stock plunged 18% in premarket trading on Tuesday after the donut maker’s annual sales and profit guidance missed analysts’ expectations, while it also booked a chunky loss from a cyber attack in December.
DNUT reported Fiscal fourth quarter organic revenue grew 1.8% to $400.6 million, its 18th consecutive quarter of same-store sales growth despite losing business due to a cyber hack at the end of last year. More concerningly for investors, total revenue for the quarter dipped 10% to $404 million as the online business bore the brunt of the attack.
The firm said it took a $10 million hit to its earnings from the attack on its online operations in December, leaving adjusted core income down 28% at $45.9 million for the quarter.
Guidance Weighs on DNUT
Weighing more heavily than the cyber attack, however, the company said it expects full-year Fiscal 2025 net revenue $1.55 billion and $1.65 billion, compared with estimates of $1.76 billion. Organic revenue growth is seen between 5% and 7%, while adjusted earnings were forecast to be between $180 million and $200 million, below projections of around $230 million.
International Business Under Review
Krispy Kreme’s tie-up with McDonald’s (MCD) is helping it to expand its reach, with the company distributing donuts from 1,900 McDonald’s outlets by end 2024. The company plans to be in about 6,000 outlets by the end of 2025.
Meanwhile, the company is looking at refranchising of its international operations after speculation it would sell its franchise in Australia and New Zealand.
“We have restructured our management teams to maximize profitable U.S. expansion and capital-light international growth. We expect to soon award contracts to outsource U.S. logistics. Finally, we have begun a process to evaluate refranchising certain international markets. I believe these changes will drive capital efficient growth, as we continue our transformation into a bigger and better Krispy Kreme,” said CEO Josh Charlesworth.
Is DNUT a Good Stock to Buy?
Overall, Wall Street has a Moderate Buy consensus rating on DNUT stock, based on two Buys and two Holds. The average DNUT price target of $13.00 implies about 42% upside, though these figures are likely to be revised following the earnings update.
