The company that once had America lining up around the block for those warm, sugar-coated circles of heaven (me included) delivered earnings this week so bad they didn’t even try to glaze over the truth. What used to be “Hot Now” has turned into more like "Not Now." After all the powdered sugar settled, shares had fallen 32% by Friday, hitting an all-time low. The only thing Krispy Kreme is rolling these days is down... like, downhill. Fast.

Krispy Kreme reported a laughable $0.01 per share in adjusted earnings. Wall Street expected $0.10… which is already pocket change, but at least it's a dime's worth of dignity. For those keeping score at home: Revenue hit $404 million (vs expected $414 million), EPS crawled in at $0.01 (vs expected $0.10), and investor confidence is basically gone. To put this in perspective, their 2024 profits are less than a THIRD of what they made in 2021. 

Of course, Krispy Kreme blamed part of their catastrophic quarter on a cybersecurity incident. Apparently, hackers cost them $11 million in revenue, plus another $3 million to fix the issue (Ever heard of Best Buy’s Geek Squad?). I'm no cyber expert, but I'm guessing the hackers weren't after their secret glaze recipe. Though at this point, that might be the only asset worth stealing. 

CEO Josh Charlesworth tried to make it sound better: "Excluding the estimated cybersecurity incident impact, results were largely in line with our expectations." In other words: "If you ignore the bad stuff, things weren't quite as terrible as they look!"

The forecast for 2025 is absolute trash. Krispy Kreme expects adjusted EPS between $0.04 and $0.08 for the entire year. Analysts were expecting $0.30. That's not just missing expectations… that's not even playing the same sport. Oh, and revenue growth? Don't hold your breath. They've basically admitted 2025 will be a carbon copy of their disastrous 2024.

Even with their McDonald's partnership delivering fresh donuts to 1,900 golden arches locations, they can't seem to turn things around. They've expanded from 3,410 points of sale to 17,557 in 2024, yet somehow managed to make less money. Like every company circling the drain, Krispy Kreme is now "restructuring management teams" and planning to "outsource U.S. logistics." They're also "evaluating refranchising certain international markets," which means "we're desperate and everything is on the table."

Charlesworth insists these changes will "drive capital efficient growth" as they continue their "transformation into a bigger and better Krispy Kreme." At this point, a transformation into a profitable Krispy Kreme would be a good start.

As for valuation, Krispy Kreme trades at a bloated 50x forward earnings, assuming they even hit the low end of their guidance. That's insanely expensive for a struggling, low-margin business. For comparison, Starbucks trades at around 20x earnings… while actually making money. The only bull case here is a potential buyout or a miraculous turnaround (both unlikely in the near term). So, is Krispy Kreme a buy? Not unless you think “donut-shaped” returns are a bullish indicator.

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Stocks.News has positions in Krispy Kreme, Best Buy, and McDonald’s mentioned in article.