Shares of Krispy Kreme, Inc. (NASDAQ:DNUT) jumped 7.43% in premarket trading on Thursday after the company posted better-than-expected third-quarter earnings, signaling that its turnaround plan is beginning to take hold.
The doughnut maker reported adjusted earnings of $0.01 per share, easily beating Wall Street’s forecast for a $0.06 loss. While revenue came in slightly below expectations at $375.3 million versus the $378.68 million consensus, organic sales still grew 0.6% year-over-year, underscoring steady underlying demand. The upbeat market reaction suggests investors are increasingly confident in the company’s restructuring strategy.
“The third quarter marked a significant pivot as we implemented our comprehensive turnaround plan,” said Krispy Kreme CEO Josh Charlesworth. “Early results showed progress over the second quarter with reduced leverage, positive free cash flow, and substantially higher adjusted EBITDA.”
Adjusted EBITDA climbed 17% to $40.6 million, more than double the level achieved in the second quarter, while margins expanded to 10.8% from 9.1% a year earlier. The improvement was supported by productivity gains, lower SG&A expenses, and cost savings from the termination of the McDonald’s USA partnership.
Krispy Kreme’s turnaround program centers on four key priorities:
- Refranchising international operations
- Enhancing returns on invested capital
- Improving margins through operational efficiency
- Achieving sustainable growth
As part of this plan, the company has closed underperforming locations, bringing its total global points of access down 6.1% to 14,851.
In the U.S. segment, revenue fell 5.3% to $216.2 million, largely reflecting the 2024 divestment of a majority stake in Insomnia Cookies. However, U.S. adjusted EBITDA surged 50.9% to $21 million, boosted in part by $9.3 million in cybersecurity-related insurance recoveries.
The International division was a bright spot, with revenue up 7.3% to $140.2 million, driven by strong performance in Canada, Japan, and Mexico, along with a recovery in the UK market.
Looking ahead, Krispy Kreme said it expects continued adjusted EBITDA improvement, positive free cash flow generation, and steady progress on its refranchising and profitability initiatives, particularly with major U.S. retail partners.