Krispy Kreme (NASDAQ:DNUT) raised its 2026 revenue outlook after reporting third-quarter sales growth in its U.S. fresh delivery business and further cost reductions, though reported revenue and adjusted earnings declined as the company refranchised operations.
The doughnut chain expects full-year net revenue of $1.35 billion to $1.4 billion, an increase and narrowing of its prior range. It maintained its adjusted EBITDA forecast of $140 million to $150 million and lowered its capital spending outlook to $40 million to $45 million.
President and CEO Josh Charlesworth said the company’s turnaround efforts are aimed at strengthening its balance sheet, expanding margins and supporting profitable growth through both U.S. operations and a less capital-intensive franchise model.
Revenue Fell as Refranchising Reshaped Results
Third-quarter net revenue declined 12% to $329 million, primarily because of the refranchising of the Western U.S. and Japan businesses, Chief Financial Officer Raphael Duvivier said. Organic revenue, which excludes refranchising and foreign exchange effects, was essentially flat.
Adjusted EBITDA fell 13.1% to $35.3 million, largely because the prior-year quarter included a $9.3 million cyber-related insurance recovery. Excluding that recovery, adjusted EBITDA increased 13%, and adjusted EBITDA margin expanded by 240 basis points.
Adjusted earnings per share rose to $0.06, an improvement of $0.05 from a year earlier. Duvivier attributed the gain to a favorable tax rate, refranchising deals and turnaround-related cost efficiencies, partly offset by the prior-year insurance recovery.
U.S. organic revenue increased 0.9%, supported by fresh delivery and digital sales. Reported U.S. adjusted EBITDA declined to $13.9 million, but rose 18% excluding the prior-year cyber recovery. On that same basis, the segment’s adjusted EBITDA margin increased by 320 basis points.
International organic revenue fell 5.4%, mainly because of declines in the U.K., partly offset by growth in Canada. Duvivier said the company restructured its U.K. production network in October to improve efficiency and profitability. Market development organic revenue rose 14%, driven by royalty revenue growth in the U.S., Middle East, Japan and Brazil.
Fresh Delivery Returns to Growth
Charlesworth said fresh delivery returned to growth in the third quarter after the company exited approximately 1,500 underperforming locations last year. Krispy Kreme has since added 715 net new doors year over year, with higher average weekly sales than the locations it exited, he said. The company and its franchisees now serve approximately 7,700 fresh delivery doors across the U.S.
The CEO said Publix has been an important contributor to recent distribution growth, while improved display prominence has helped sales at Sam’s Club. Krispy Kreme concluded its latest U.S. rotation at Costco in August and is exploring other opportunities with the retailer, including seasonal offerings and roadshows.
In response to an analyst’s question, Charlesworth said Krispy Kreme products are available in less than half of Walmart and Target locations, leaving room for further distribution. He also said the company is reviewing its convenience-store footprint, where it believes higher fuel prices have contributed to reduced traffic.
The digital channel remains another growth driver, Charlesworth said, supported by platform improvements and a U.S. loyalty program with more than 18 million members.
Franchise Expansion and Cash Flow
Franchisees now generate approximately 42% of Krispy Kreme’s systemwide sales, Charlesworth said. The company recently announced an agreement with an existing franchisee to open 33 shops in the New York City metropolitan area over five years. It also announced an agreement with Gray Mackenzie Restaurants to open 120 shops in Pakistan over the same period.
By the end of the third quarter, 98 new shops had opened during the year, nearly all franchised. Duvivier said the company is pursuing one additional refranchising deal and is seeking partners with capital and a commitment to growth.
Year-to-date capital spending fell approximately 65% to $28.6 million, while free cash flow improved by $82 million. Krispy Kreme continues to expect more than $15 million in positive free cash flow for 2026.
The company’s net leverage ratio stood at 5.5 times, down 1.2 turns from the end of 2025. Duvivier said reducing leverage remains a priority and reiterated the expectation that the ratio will be below 5.5 times at year-end.
Guidance and Inflation
Krispy Kreme maintained its forecast for systemwide sales growth of 2% to 4% in constant currency. Global systemwide sales rose 1% in the third quarter, Charlesworth said.
During the question-and-answer session, Bank of America analyst Aisling Grueninger asked why the higher revenue outlook did not result in an increase to adjusted EBITDA guidance. Duvivier pointed to the company’s cost-control efforts and maintained outlook but did not identify a specific reason for the difference.
Duvivier also said commodity and fuel inflation had increased, including a significant rise in edible oil costs since the prior quarter. The company plans to address food commodity inflation through cost initiatives and modest, selective pricing, he said, while declining to provide a 2027 outlook.
About Krispy Kreme (NASDAQ:DNUT)
Krispy Kreme, Inc is a global doughnut and coffee company best known for its Original Glazed doughnuts. The company sells doughnuts, packaged sweets, coffee and other beverages through Krispy Kreme shops, in-store retail displays and digital ordering channels.
Krispy Kreme operates a hub-and-spoke distribution model that combines doughnut-making hubs and shops with delivery to grocery stores, convenience stores and other retail locations. Its products are also distributed through partnerships and branded locations, allowing the company to expand its reach beyond traditional Krispy Kreme shops.
Founded in 1937 in Winston-Salem, North Carolina, by Vernon Rudolph, Krispy Kreme has grown into an international brand serving customers in the United States and various markets across North America, Europe, Asia and Oceania.
