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Krispy Kreme raises its earnings guidance, but investors balk anyway

The doughnut chain’s stock plunged 7% even after the company said earnings and profits would be better than expected.
Krispy Kreme sales earnings
Photograph: Shutterstock

Krispy Kreme updated its guidance on Monday, telling investors that it expects better revenues and profits than initially anticipated, noting that price increases have been enough to offset higher food and labor costs.

That apparently didn’t do much to assuage investors. The stock fell 7% through late morning trading.

At least part of that was due to the overall sentiment on Wall Street. Investors hammered restaurants on Monday—all but one company—Restaurant Brands International—was in negative territory.

Yet even among that poorly performing group, Krispy Kreme stood out. It was among the worst-performing stocks on Monday along with Fiesta Restaurant Group (down 7%) and Fatburger owner Fat Brands (down 6%).

The Charlotte-based Krispy Kreme, which also owns Insomnia Cookies, has not been able to generate much enthusiasm from investors.

The company initially raised $500 million in its July initial public offering, selling at $17 a share—under its expected range of $21 to $24. It briefly exceeded $21 a share after trading started but has been in decline ever since.

The company’s stock price did recover some since early October based in part on relatively strong earnings and a boost from its sponsor, JAB Holdings, which agreed to acquire more stock in Krispy Kreme over the next three years.

On Monday, Krispy Kreme said it expects revenue this year to grow 22% to 23%—essentially saying that revenues would grow at the top of its previously expected growth range of 19% to 23%. Organic revenue growth, similar to same-store sales, would grow as much as 13% this year—above its previous guidance of up to 12% growth.

Adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, is expected to increase as much as 29% this year, up from its previous expectation of as much as 27%.

“Our global omnichannel business has continued to perform well as we benefit from the sharing and gifting occasions of the holiday season,” CEO Mike Tattersfield said in a statement. “Our U.S. and international businesses have both contributed significantly to our growth this quarter.”

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