Krispy Kreme Inc.’s stock jumped 6% Wednesday after the doughnut maker beat consensus estimates for the fourth quarter and offered upbeat guidance for 2023.
The company DNUT, +5.47% had a net loss of $2.7 million, or 2 cents a share, for the quarter ending Jan. 1, after seeing income of $1.356 million, or 1 cent a share, in the same period a year earlier. The loss was due to charges of $12.4 million, 90% of which were noncash, booked to cover the costs of closing unprofitable restaurants.
Adjusted per-share earnings came to 11 cents, ahead of the FactSet consensus of 10 cents. Revenue rose to $404.6 million from $370.6 million a year ago, also ahead of the $395 million FactSet consensus.
Chief Executive Mike Tattersfield said the company benefited from the success of Halloween and winter holiday specialty doughnuts, while its e-commerce business grew 23% to mark the best quarter since the start of the pandemic.
On a call with analysts, Tattersfield said the company’s Insomnia Cookies chain, which delivers warm cookies, along with other baked goods and (cold) ice cream, also contributed, benefiting from an expanded radius of up to 10 miles for warm-cookie delivery.
“These efforts led to more than a 20% increase in e-commerce revenue in the fourth quarter compared to a year ago, and led to a 260-basis-point increase in sales mix of e-commerce to 18.3% for the company as a whole during the quarter,” he said, according to a FactSet transcript.
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The company believes Insomnia “will be the next Krispy Kreme,” he said, and it plans to expand into the U.K. and Canada this year.
As for Krispy Kreme, the company is keen to create greater access to its products globally and is planning to expand into South America, Central America and the Caribbean in 2023. It opened its first outlets in the Middle East and Africa in 2022.
“Interest from high quality franchise partners remains robust, and we are confident in our ability to sign three to five new countries a year moving forward,” he said. “We expect to open five to seven new countries in 2023, including in France, bringing our total to more than 35 countries by the end of this year.”
For 2023, the company is expecting adjusted earnings per share of 31 to 34 cents on revenue of $1.65 billion to $1.68 billion. The FactSet consensus is for EPS of 33 cents and revenue of $1.65 billion.
Truist Securities analysts reiterated a hold rating on the stock and said the guidance was in line with numbers provided at a December investor day.
“While we believe the structural pricing efforts are more robust than its food peers (products typically have fewer use cases and 86% of consumers who eat the product don’t purchase it), it appears that elasticities should have more of an impact on volumes than previously thought and should lead to more promos through 2023,” analysts led by Bill Chappell said in a note to clients.
The stock has gained 26% year to date, while the S&P 500 SPX, -0.38% has gained 7%.
