Doughnut chain Krispy Kreme (NASDAQ:DNUT) reported Q2 CY2026 results topping the market's revenue expectations , but sales fell by 12.8% year on year to $331 million. Its non-GAAP loss of $0.03 per share was in line with analysts' consensus estimates.
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Revenue: $331 million vs analyst estimates of $302.7 million (12.8% year-on-year decline, 9.4% beat)
Adjusted EPS: -$0.03 vs analyst estimates of -$0.02 (in line)
Adjusted EBITDA: $28.81 million vs analyst estimates of $27.74 million (8.7% margin, 3.9% beat)
Operating Margin: -3.3%, up from -114% in the same quarter last year
Locations: 15,665 at quarter end, down from 18,113 in the same quarter last year
Krispy Kreme's second quarter saw positive market reaction as the company's revenue topped Wall Street's expectations despite a notable year-over-year decline. Management attributed this outperformance to ongoing progress in its turnaround plan, particularly through re-franchising efforts and operational improvements in the U.S. CEO Joshua Charlesworth emphasized that "our focus on optimizing operations and logistics, along with driving more profitable sales per door in fresh delivery, is translating into stronger financial performance." Enhanced production planning, labor optimization, and cost control initiatives were highlighted as key contributors to margin improvement.
Looking forward, Krispy Kreme's guidance is anchored by plans to further expand its asset-light franchise model and deepen its partnerships with major retailers. Management outlined upcoming initiatives such as broadening product availability through digital channels and leveraging underutilized production capacity. CFO Raphael Duvivier noted, "We believe our attractive franchise margins advance our capital-light growth strategy," while Charlesworth stated that expanding through partners like Walmart and Target is expected to drive sustainable, profitable growth in the U.S. and internationally.
Management linked Q2 performance to strategic re-franchising, operational efficiencies, and the execution of a multi-pillar turnaround plan, while emphasizing continued progress in U.S. and international markets.
Re-franchising momentum: Krispy Kreme accelerated its transition to a more asset-light business model by completing transactions in Japan and the Western U.S., increasing the share of franchise-generated sales from 25% to 42%. Management aims for franchisees to account for 50% of system-wide sales next year, which is expected to improve margins and free cash flow over time.
International expansion via franchises: The company entered three new international franchise markets—Netherlands, Estonia, and Mauritius—this year, reaching its annual target for new market entries. Franchisees were responsible for nearly all of the 59 new shop openings year-to-date, supporting global growth with minimal capital investment from Krispy Kreme itself.
U.S. operational optimization: Enhanced production planning, labor efficiency initiatives, and the outsourcing of U.S. logistics have contributed to a notable reduction in costs. Management expects ongoing benefits from these changes as more logistics savings are realized in coming quarters.
Digital and retail channel growth: Digital sales in the U.S. grew 8% year-over-year and now represent 22% of domestic retail sales, propelled by improvements to payment systems and a loyalty program that has reached 18 million members. Additionally, over 200 new retail doors were added with key partners, such as Walmart and Target, increasing brand accessibility.
Product innovation and marketing: A diverse menu strategy, featuring a core menu, five annual seasonal collections, and regular limited-time offerings, has helped sustain consumer interest and drive average ticket size. Targeted promotions, such as discounted second dozens, are designed to deliver value and stimulate higher purchase volumes.