Krispy Kreme is time honored for its doughnuts, but there are still problems with the business.
From a stock perspective, Krispy Kreme is underperforming the market, and struggling with consistent profitability.
The company has put together some turnaround ideas that need a little bit of substance to take seriously.
Doughnuts. We all love them. Despite this, they’re not always the dream investment. Some operations do well, while others are struggling right now. Krispy Kreme (NASDAQ: DNUT) makes its money from the sale of its famous doughnuts, as well as coffee and other drinks. The chain has been around for a long time, but has struggled somewhat to find its footing in recent years in terms of profitability.
This is not a stock that has been outperforming. The shares are down more than 77% over the last five years, versus an S&P 500 return of over 85% in gains. Things have been a bit different over the last six months, as the big pullbacks in Krispy Kreme’s stock have seemingly led to investors getting reinvigorated in owning shares, despite the fact that the company has some weakening financials. In all, shares are up 46.8% over the last six months.
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Through the last five years, the company has been largely unprofitable. The doughnut/coffee chain had losses in 2020, 2021, 2022, and 2023. Things changed in 2024, but it was a small $3.1 million in net income, off of $1.67 billion in net revenue.
In 2025, the first three quarters have been a little rough. Net revenues declined by 10.39% through the first three quarters of the year to $1.13 billion. Income took a major hit and fell to a net loss attributable to Krispy Kreme of roughly $488 million, versus a profit of $25.5 million in the first nine months of fiscal 2024. In all, Krispy Kreme had losses of $2.86 per diluted share through the first nine months of 2025.
Image source: Getty Images.
Because of these shifts, the balance sheet is taking some tough hits. While total cash increased slightly year over year in the third quarter to $30.7 million, total equity took a big hit. Shareholders’ equity declined 41% year over year to $693.8 million.
The company is undertaking a number of initiatives to attempt to make a turnaround in the business. These include refranchising, which the company claims will improve financial flexibility. A part of this plan is to improve Krispy Kreme’s return on invested capital through the aforementioned refranchising and taking advantage of existing assets. The company also says it wants to expand margins through moves such as outsourcing U.S. logistics.
The fourth and final piece of the listed turnaround plan was to “drive sustainable, profitable growth.” This one seemed a bit generic, as every company is meant to drive sustainable and profitable growth.
Before buying Krispy Kreme, you need to decide if you’re willing to trust that these turnaround measures will have the desired effect. They seem a little vague as to the actual implementation.
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David Butler has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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