0001857154-25-000140
SEC filingQ3 revenue fell 1.2% to $375.3M but organic growth turned positive; Adjusted EBITDA rose 17% on insurance proceeds and cost actions.
In the third quarter of fiscal 2025, Krispy Kreme reported net revenues of $375.3 million, a decline of 1.2% year-over-year, primarily due to the absence of Insomnia Cookies revenues following its divestiture in Q3 2024. However, organic revenue grew 0.6%, reflecting underlying momentum despite a challenging consumer environment. The gross margin was not explicitly reported, but product and distribution costs as a percentage of revenue increased slightly to 25.6% from 25.2%. Operating loss improved to $7.2 million (loss of 1.9% of revenue) from a loss of $16.0 million (4.2% of revenue) in the prior year, a 230 basis point margin improvement. This was driven by lower SG&A expenses (down 30.5%) due to restructuring and reduced share-based compensation, partially offset by higher operating expenses and a $4.8 million goodwill impairment. Net loss attributable to Krispy Kreme was $19.4 million versus net income of $39.6 million a year ago, mainly due to the absence of a $87.1 million gain on the Insomnia Cookies divestiture. Adjusted EBITDA rose 17.0% to $40.6 million, aided by $9.3 million in business interruption insurance proceeds from the 2024 cybersecurity incident.
Management's Turnaround Plan centers on deleveraging, refranchising, reducing capital intensity, and expanding margins. Key actions include: outsourcing U.S. logistics to third-party carriers (expected through mid-2026), focusing on profitable DFD growth while closing underperforming doors, and reducing full-year capital expenditures. The McDonald's USA partnership termination is expected to continue positively impacting U.S. profitability in Q4 2025 and H1 2026. No specific numerical guidance was provided for future periods, but the company expects to reduce capital investment in FY2026 versus FY2025. The leverage ratio stood at 4.5x as of Q3 2025, within the 5.0x covenant. The change in dividend policy (no longer expecting to pay quarterly cash dividends) reflects a pivot toward debt reduction and reinvestment. Risks include tariff impacts on commodity costs and macroeconomic headwinds affecting consumer spending.
As of September 28, 2025, Krispy Kreme held $30.7M in cash and equivalents, down slightly from $29.0M at year-end 2024. Total debt stood at $979.5M, reflecting a net increase of $54.4M during the three quarters, driven by $661M in new borrowings offset by $606.6M in repayments. Shareholders' equity was $693.8M, a sharp decline from $1,164.4M at year-end 2024, primarily due to a $494.7M net loss (including $356M goodwill impairment). Deferred revenue totaled $24.0M.
No material purchase commitments (e.g., supply or capacity agreements) were disclosed in the Notes. The company had $24.6M in letters of credit and surety bonds outstanding as of Sep 28, 2025, mainly to secure self-insurance reimbursements. Lease obligations total $547.2M (including finance leases), with $47.7M current operating lease liabilities and $20.9M current finance lease liabilities.
U.S. (58% of total revenue in Q3): Revenue declined 5.3% YoY to $216.2M, with Adjusted EBIT of $6.1M (2.8% margin). The segment includes Insomnia Cookies through its deconsolidation in July 2024. International (37% of revenue): Revenue grew 7.3% to $140.2M, with Adjusted EBIT of $14.9M (10.6% margin). Operations span UK, Ireland, Australia, NZ, Mexico, Canada, Japan. Market Development (5% of revenue): Revenue fell 9.2% to $18.9M, but Adjusted EBIT margin remained high at 63.4% ($12.0M). Consists of global franchise operations. The company does not report total assets by segment. Note 4 shows goodwill by segment: U.S. $382.1M, International $214.5M, Market Development $111.8M, after $356M impairment across U.S. and International.