Krispy Kreme's second-quarter results were met with a negative market reaction, as the company reported a significant year-over-year sales decline and a non-GAAP loss that fell short of Wall Street’s expectations. Management attributed the underperformance primarily to higher-than-expected losses from the discontinued McDonald’s USA partnership and increased insurance costs related to in-house delivery operations. CEO Josh Charlesworth acknowledged these challenges, noting the company is “quickly removing our costs related to the McDonald’s partnership and expect to begin recouping profitability in the third quarter.”

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While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Krispy Kreme’s Q2 Earnings Call

• Rahul Krotthapalli (JPMorgan): asked about managing last-mile delivery profitability and whether product innovation—like longer shelf-life doughnuts—could play a role. CEO Josh Charlesworth emphasized the focus on high-traffic, high-visibility locations and predictable costs through third-party logistics.
• Rahul Krotthapalli (JPMorgan): inquired about optimizing Hot Light Theater shop productivity and possible consolidation. Charlesworth highlighted new COO Nicola Steele’s focus on operational efficiency and optimizing the delivery footprint.
• Rahul Krotthapalli (JPMorgan): questioned the pace and risks of executing the international refranchising strategy. CFO Raphael Duvivier said the company is targeting one to two deals this year and will use proceeds to deleverage.
• Daniel Guglielmo (Capital One Securities): sought clarity on the simultaneous execution of turnaround priorities. Charlesworth confirmed that actions like refranchising, logistics outsourcing, and G&A cuts are already underway and benefits are expected within the year.
• Sara Senatore (Bank of America): asked about the shift to a capital-light model and long-term business structure. Duvivier and Charlesworth explained that the new model should yield lower capital requirements, higher margins, and a multichannel approach centered on franchisee partnerships.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) progress in refranchising international markets and how quickly proceeds are used to reduce debt, (2) evidence of margin recovery as underperforming U.S. delivery doors are replaced by higher-volume outlets and logistics outsourcing continues, and (3) the impact of marketing efforts focused on the Original Glazed doughnut and expansion with large retail partners. Execution of these operational shifts and the pace of digital channel growth will also be critical indicators.

Krispy Kreme currently trades at $3.35, down from $3.42 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).

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