Q1 2024 Earnings Summary
Reported on Jan 15, 2025 (Before Market Open)
Pre-Earnings Price$12.71Last close (May 8, 2024)
Post-Earnings Price$13.05Open (May 9, 2024)
Price Change
$0.34(+2.68%)
- The partnership with McDonald's is expected to add more than 12,000 new points of access by the end of 2026, significantly expanding Krispy Kreme's distribution network and leading to an estimated $340 million to $430 million in annualized incremental revenue and $70 million to $100 million of additional adjusted EBITDA, creating significant operating leverage on the existing business , , ,.
- Krispy Kreme is experiencing strong consumer engagement with record sales days, such as Valentine's Day being the biggest sales day in the history of the company, indicating that the brand remains healthy and is viewed as an affordable sweet treat for special occasions.
- Growth in digital sales and the successful relaunch of the loyalty program are driving future sales growth, with tremendous response and engagement, energizing both existing and new loyalty members.
- Potential risks associated with the McDonald's partnership due to its pioneering nature and lack of prior similar collaborations, as acknowledged by the company: "So I think certainly, from our point of view, it feels pioneering". This untested partnership may face execution challenges and uncertainties.
- Upfront costs and increased SG&A and OpEx related to the McDonald's rollout may pressure margins before significant revenue is realized. The company stated that they are incurring start-up costs but expect minimal revenue impact this year: "We are... incurring start-up costs and SG&A and OpEx... we do expect that to be fairly minimal this year". This suggests potential near-term margin compression.
- The agreement with McDonald's lasts only one year after the last rollout in 2026, indicating uncertainty about long-term commitment. The company mentioned: "The agreement lasts 1 year after the last rollout in 2026 and of course, can be renewed after that". This implies that if performance does not meet expectations, McDonald's could choose not to renew the partnership.