Shares of doughnut and coffee chain Krispy Kreme Inc. (NASDAQ: DNUT ) plunged more than 28% Thursday after the chain said it would no longer pay a quarterly dividend and was “reevaluating” the deployment of its planned McDonald’s rollout and earnings missed expectations.
Krispy Kreme’s first quarter 2025 earnings missed expectations, with the company reporting negative earnings per share (EPS) of negative $0.05, below the expected negative $0.04. Revenue was $375.2 million, in line with previous expectations but below expectations of $385.11 million.
Krispy Kreme shares fell 28.18% in pre-market trading following the announcement and were still down nearly 25% by the close. The stock has fallen more than 65% over the past year, according to InvestingPro. At the same time, the company said it would stop its quarterly dividend to pay down its growing debt.
“To be a bigger Krispy Kreme, we have to be better, and we are taking swift and decisive action to pay down debt, de-lever our balance sheet and drive sustainable, profitable growth,” said Krispy Kreme CEO Josh Charlesworth.
Krispy Kreme began selling its doughnuts at McDonald’s in March 2024 and is now sold at about 2,400 of the burger chain’s restaurants. The company said it will not expand sales in the second quarter due to weaker-than-expected sales.
The companies previously said the doughnuts would be sold at all U.S. McDonald’s locations by the end of 2026. Like many fast-food chains, McDonald’s U.S. stores are seeing reduced traffic as consumers cut back on spending amid concerns about soaring prices and a potential recession.
Like many companies, the doughnut maker cut its financial outlook due to uncertainty over pricing and sales caused by President Donald Trump’s tariff war.
The well-known doughnut company, known for its iconic original glazed doughnut, also sells beverages such as coffee and offers catering services.
Krispy Kreme has faced significant operational challenges recently after a cybersecurity breach disrupted Krispy Kreme’s online ordering system in November, leading to an ongoing disruption to digital sales, which account for 15.5% of the company’s doughnut shop sales.
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