Krispy Kreme, Inc. (DNUT) Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue was $379.8M, at the high end of the prior Q2 guidance range ($370–$385M), but Adjusted EBITDA of $20.1M missed the $30–$35M guidance due to losses from the now-ended McDonald’s USA partnership and weaker retail transactions .
• Management announced a comprehensive turnaround plan focused on refranchising, capital-light growth, margin expansion (including outsourcing U.S. logistics), and profitable U.S. expansion via high-volume retail doors; they expect higher EBITDA and positive cash flow in H2 vs H1 .
• Large non-cash impairments ($406.9M total, including $356.0M goodwill) drove GAAP net loss to $441.1M and operating loss to $434.6M; impairments were tied to end of McDonald’s USA partnership and updated forecasts amid sustained market cap decline .
• Catalyst: clarity on refranchising pace (targeting 1–2 deals this year), logistics outsourcing ramp, and U.S. door optimization (exit ~1,500 low-volume doors, add ~1,100 high-volume doors) could drive sentiment on margin recovery and deleveraging trajectory .

What Went Well and What Went Wrong

What Went Well

• Focused turnaround plan with clear actions: refranchising select international markets (Australia/NZ, Japan, Mexico, UK/Ireland), restructuring Western U.S. JV, and outsourcing U.S. logistics to improve predictability and margins .
• U.S. distribution gains in high-volume retail: added 400+ doors with Costco, Walmart, Target, and Kroger in Q2; digital sales reached >20% of U.S. retail sales; awarded additional shelf space at Walmart .
• International organic revenue grew 5.9% YoY (Q2), led by Canada, Japan, and Mexico; U.K. margins improved sequentially under new leadership, indicating early progress .

What Went Wrong

• EBITDA miss versus guidance: Adjusted EBITDA of $20.1M fell short of the $30–$35M Q2 outlook, primarily due to higher-than-anticipated losses from the McDonald’s USA partnership and lower retail transactions .
• Significant non-cash impairments ($356.0M goodwill; $22.1M long-lived assets; $28.9M lease impairment/termination) weighed on GAAP results and highlighted stress in the U.S., U.K./Ireland, and Australia/NZ reporting units .
• U.S. organic revenue declined 3.1% as transaction softness and strategic door closures pressured operating leverage; U.S. Adjusted EBITDA down 69.6% YoY (Q2) .

Financial Results

Actual vs S&P Global Consensus

Values retrieved from S&P Global.*

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We have implemented a comprehensive turnaround plan to deleverage the balance sheet and deliver sustainable, profitable growth through refranchising, improving returns on capital, expanding margins, and driving sustainable, profitable U.S. growth.” — CEO Josh Charlesworth .
• “We added over 400 doors with Costco, Walmart, Target, and Kroger in the second quarter… digital growth increased by double digits and accounted for more than 20% of U.S. retail sales.” — CEO Josh Charlesworth .
• “We now have over $200M of excess liquidity as of the end of Q2… bank leverage ratio was 4.5, net leverage 7.5.” — CFO Rafael Duvivier .
• “We expect EBITDA to be higher in the second half of the year than in the first half… and cash flow to be positive.” — CEO Josh Charlesworth .
• “Efforts to bring our costs in line with unit demand [for McDonald’s USA] were unsuccessful, making the partnership unsustainable for us.” — CEO Josh Charlesworth .

Q&A Highlights

• Profitability of DFD doors and last-mile cost management: Management emphasized focusing on high-traffic doors with strong in-store visibility, combined with third-party logistics for predictable costs and sustainable profitability .
• Refranchising timeline: CFO is targeting 1–2 refranchising deals in 2025 (Japan, Mexico, UK, Australia/NZ), with proceeds earmarked for deleveraging .
• Capex trajectory: Under capital-light franchise model, Capex intensity should decline and EBITDA-to-cash conversion improve; H2 capital expected below H1 .
• U.S. network optimization: Exiting ~1,500 underperforming doors while adding ~1,100 high-volume doors to improve route profitability and margins .

Estimates Context

• Revenue modestly missed consensus for Q2 ($379.8M vs $382.2M estimate*), after missing in Q1 and Q4; Adjusted/Primary EPS missed in Q2 (−$0.15 vs −$0.033 estimate*), matched/marginally below in Q1 and Q4 .
• Street is modeling FY 2025 revenue ~$1.521B* and EPS −$0.171* amid guidance withdrawal; estimate counts show 6 EPS and 6 revenue estimates for Q2 [GetEstimates].

Values retrieved from S&P Global.*

Key Takeaways for Investors

• EBITDA miss and large non-cash impairments overshadowed in-range revenue; near-term stock narrative hinges on execution of logistics outsourcing, refranchising pace, and U.S. door mix shift toward high-volume routes .
• Ending McDonald’s USA removes an unprofitable growth vector; redeployment to high-volume retail partners (Costco/Walmart/Target/Kroger) should stabilize margins and reduce volatility .
• Liquidity of ~$244M (cash + undrawn revolver) and halted dividend signal priority on deleveraging; refranchising proceeds and reduced Capex intensity support balance sheet repair .
• International remains a growth engine (5.9% organic in Q2) with strong Sales per Hub; U.K. sequential margin improvements are an early positive under new leadership .
• Management guides qualitatively to higher H2 EBITDA and positive cash flow; monitoring H2 execution milestones (outsourcing penetration, door churn completion, refranchising deals) is critical for re-rating .
• Estimate revisions likely lower for EBITDA/EPS post-Q2 miss; watch for Street updates as turnaround actions flow through margins and cash conversion [GetEstimates].
• Tactical: sentiment could improve with announced refranchising transactions, H2 cash flow inflection, and evidence of route profitability uplift; downside risks remain from consumer softness and transition frictions .

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Sources: Q2 2025 earnings press release and reconciliations ; Q2 2025 earnings call transcript ; 8-K including Item 2.02 and Exhibit 99.1 ; McDonald’s partnership termination press release ; Insomnia Cookies stake sale press release ; Q1 2025 press release (guidance and metrics) ; Q4 2024 press release (baseline and guidance) .