Krispy Kreme posts first quarterly profit since IPO

Krispy Kreme reported its first quarterly profit since its IPO on Tuesday, but fell short of Wall Street earnings expectations.

Shares of the donut company rose nearly 2% in premarket trading. Since its IPO in July, the stock has struggled, falling 33%.

Here’s what the company reported compared to what Wall Street expected, based on a Refinitiv analyst survey:

  • Earnings per share: 8 cents adjusted vs. 9 cents expected
  • Revenue: $371 million vs. $364 million expected

Krispy Kreme reported net income of $4.3 million in the fourth quarter, or 1 cent per share. A year ago, its quarterly net profit was not significant, according to the company’s statement.

Excluding items, the company earned 8 cents per share, missing the 9 cents per share expected by analysts polled by Refinitiv.

CEO Mike Tattersfield said in an interview that Krispy Kreme, like the entire restaurant industry, is experiencing labor and commodity inflation, although it is able to protect against rising ingredient costs. The cost of sugar, wheat and oil accounts for about 12% of the company’s sales, and he said the company also has pricing power.

In the fourth quarter, Krispy Kreme raised prices twice. Compared to the prior year period, the company’s prices are now up single digits worldwide, according to Tattersfield.

“We still view the awards as an opportunity,” he said.

Net sales increased 13.8% to $371 million, beating expectations of $364 million. Organic revenue increased by 13.9% compared to the same period of the previous year and by 15.9% over two years.

Tattersfield credited strong Halloween and holiday demand for the company’s strong sales growth. Looking ahead to the first quarter, he said Valentine’s Day also saw robust sales. February holidays are usually the most important day for company sales.

“Our brand doesn’t tend to be a daily ritual,” Tattersfield said. “It tends to be at a rally.”

For 2022, Krispy Kreme anticipates net sales growth of 11% to 13%, in line with Wall Street expectations. But its outlook for adjusted earnings per share of 38 cents to 41 cents fell short of analysts’ expectations of 45 cents per share.

Read the full earnings report here.

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