Krispy Kreme Stock Gains Amid Successful Brand Activations In Dolly Parton Southern Sweets And Kit Kat In Q2

Author: Nabaparna Bhattacharya | August 08, 2024 09:26am

Krispy Kreme, Inc. (NASDAQ:DNUT) shares are trading higher after the company reported second-quarter adjusted earnings per share of five cents, in line with the street view.

Quarterly revenues of $438.8 million (+7.3%) exceeded the analyst consensus of $435.49 million.

Company organic revenue rose by 7.8%, driven by a 23.2% boost in POA, a 22% increase in digital sales, and an 18% rise in DFD sales.

This growth was fueled by successful global brand activations, such as the Dolly Parton Southern Sweets collection and Kit Kat.

Adjusted EBITDA for the quarter increased by 12.1% to $54.7 million, with margins improving by 60 basis points to 12.5%.

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This growth was supported by the optimization of the Hub and Spoke strategy and SG&A efficiencies from cost controls and reduced compensation expenses.

In the U.S. segment, net revenue grew $21.9 million, or 8.2%, with organic revenue growth of 8.4%. In the International segment, net revenue grew $4.7 million, or 3.9%.

In the Market Development segment, net revenue and organic revenue increased by $3.4 million, or 16.1%, driven by greater equipment sales than in the prior year.

The company received $127.4 million following the sale of a majority stake in Insomnia Cookies and have received an additional $45 million following the refinancing of intercompany debt.

“The recent sale of a majority stake in Insomnia Cookies allows us to focus on our core strategy of producing, selling, and distributing fresh doughnuts daily whilst also further improving our financial profile,”  said Josh Charlesworth, CEO.

Outlook: Krispy Kreme expects FY24 adjusted EPS to range between $0.24 and $0.28 (prior view: $0.27 to $0.31), compared to the $0.27 estimate, and revenue between $1.650 billion and $1.685 billion, below the $1.785 billion estimate.

Krispy Kreme said it updated the outlook solely to reflect the recent sale of stake sale in Insomnia Cookies.

Price Action: DNUT shares are trading higher by 3.26% to $9.49 premarket at last check Thursday.

Photo via Shutterstock

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