Why Krispy Kreme Stock Crushed It Today
Yahoo Finance ·
Krispy Kreme's turnaround strategy is working. A new asset-light business model could be the key to the company's success. Shares of Krispy Kreme ( DNUT +30.68% ) surged more than 30% on Thursday after the doughnut maker boosted its full-year sales forecast. Krispy Kreme's net revenue declined 12.4% year over year to $328.8 million in its fiscal third quarter, which ended on Sept. 27. The decline reflects the doughnut shop operator's shift toward a less capital-intensive, franchise -based business model. Roughly a quarter of the chain's systemwide sales -- the total dollar value of all Krispy Kreme product sales -- came from franchise-operated stores in fiscal 2025. That figure rose to 42% in the third quarter. Management is targeting 50% of systemwide sales generated by franchisees by fiscal 2027. Third-quarter systemwide sales increased 1% to $490.2 million. Refranchising is a key part of Krispy Kreme's turnaround strategy. Selling company-operated stores to franchisees is helping Krispy Kreme pay down debt and improve its profit margins and cash flow. The company's Q3 adjusted net income rose sevenfold to $9.9 million, or $0.06 per share. Looking ahead, Krispy Kreme lifted its full-year net revenue target range to $1.35 billion to $1.4 billion, up from a prior forecast of $1.25 billion to $1.35 billion. Systemwide sales are projected to rise 2% to 4% to $1.96 billion, driven by at least 100 franchised store openings. The company also expects to generate free cash flow of over $15 million. "Our results demonstrate the success of the actions we are taking to drive sustainable, profitable growth," CEO Josh Charlesworth said. *Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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