0001857154-25-000131
SEC filingRevenue fell 13.5% on divestiture and consumer softness; large goodwill impairment drove net loss.
For the second quarter of fiscal 2025, Krispy Kreme reported total net revenues of $379.8 million, a decline of 13.5% year-over-year. The decline was largely due to the $64.2 million impact from the divestiture of a controlling interest in Insomnia Cookies. Organic revenue fell 0.8%, driven by lower doughnut shop transaction volumes amid consumer softness, partially offset by a 14.3% increase in Global Points of Access and approximately 4% pricing from reduced discounting. Net loss widened to $441.1 million, primarily reflecting $406.9 million in goodwill and other asset impairments. Adjusted EBITDA plunged 63.3% to $20.1 million, while Adjusted EPS was a loss of $0.15 versus a gain of $0.05 in the prior year.
Management outlined several strategic priorities. The termination of the McDonald's USA partnership is expected to positively impact U.S. profitability starting in Q3 fiscal 2025 as related costs are removed. The company plans to continue outsourcing U.S. DFD deliveries to third-party logistics carriers through mid-fiscal 2026. Internationally, Krispy Kreme expects to open in three to four new countries in fiscal 2025 (Brazil being the first). The turnaround plan also includes refranchising certain international equity markets (U.K., Ireland, Australia, New Zealand, Mexico, Japan) and reducing capital intensity by focusing on franchisee development. No quantitative guidance was provided, but the company stated it expects to reduce capital investment going forward. Additionally, the company has changed its dividend policy and no longer expects to pay quarterly cash dividends.
As of June 29, 2025, Krispy Kreme reported cash and cash equivalents of $21.3 million (plus $0.6 million restricted cash), a sharp decline from $29.0 million at year-end 2024. Total debt rose to $957.0 million from $900.9 million, driven by incremental borrowings under the 2023 Facility ($125.0 million added via amendment) and finance lease obligations. The current portion of long-term debt stands at $67.6 million. Shareholders' equity plummeted to $718.2 million from $1,164.4 million, primarily due to the $435.3 million net loss and $356.0 million goodwill impairment. Inventory increased to $33.7 million from $28.1 million, while deferred revenue remained stable at $25.1 million.
The filing discloses letters of credit totaling $20.3 million (down from $20.8 million) to secure insurance obligations. No other material purchase commitments are noted. The company has vendor finance programs (supply chain and structured payables) totaling $138.4 million, but these are not classified as purchase commitments. The termination of the McDonald's Business Relationship Agreement on July 2, 2025, eliminated future obligations under that agreement, but no exit costs beyond the impairment charges were quantified.
Buybacks were minimal at $0.8 million in the first half of 2025. The quarterly dividend was maintained at $0.035 per share, but the second quarter dividend declared was only $13 thousand (likely reflecting a near-total suspension after Q1). Total dividends paid were $11.9 million. The company issued $516.9 million in debt and repaid $485.9 million, resulting in a net debt increase of $31.0 million. Capital expenditures totaled $54.1 million (7.2% of revenue), down from $60.7 million in the prior year period. The company completed two sale-leaseback transactions for $10.9 million, recognizing a $6.7 million gain.
The U.S. segment (including Insomnia Cookies through deconsolidation) generated $230.1 million in revenue (down 20.5% YoY) and an Adjusted EBIT loss of $7.4 million, reflecting the McDonald's termination and impairment charges. International segment revenue grew 6.0% to $132.8 million, with Adjusted EBIT of $10.0 million (7.5% margin). Market Development (franchise) revenue fell 30.2% to $16.9 million, but maintained a high margin of 52.7%. Corporate expenses were $19.4 million. The goodwill impairment of $356.0 million was allocated to U.S. ($270.2 million) and International ($85.8 million).
For the first half of FY2025, Krispy Kreme reported a net loss of $474.5M, largely driven by a $356.0M goodwill impairment and $51.1M in other asset impairments. Consequently, net cash used in operating activities was -$53.4M, a significant deterioration from $15.5M in the prior year period. The decline was exacerbated by a $41.9M use of cash from working capital changes. Capital expenditures remained elevated at $54.1M, outpacing CFO and resulting in negative free cash flow (though not explicitly stated). Investing activities were bolstered by $75.0M in net proceeds from the divestiture of Insomnia Cookies. Financing activities provided $16.2M, driven by net debt issuance of $31.0M ($516.9M proceeds vs. $485.9M repayments), partially offset by $11.9M in distributions to shareholders and $0.8M in share repurchases. The company's cash position decreased by $7.5M to $21.8M. Notably, the operating cash flow shortfall highlights reliance on divestiture proceeds and financing to fund capex and shareholder returns.