By Dean Seal

Krispy Kreme is retooling its distribution network to prioritize selling doughnuts through retailers like Walmart and Costco, according to its chief executive, as part of a turnaround effort launched in the aftermath of its split with McDonald's.

The 88-year-old doughnut brand cut its tally of global points of access, or locations where its doughnuts are sold worldwide, by more than 6% in the third quarter. The company is making profitable growth its north star and shedding distribution points that have been underperforming, Chief Executive Josh Charlesworth said.

"We've had to exit from some customers, and have really been adding a lot of higher-traffic, higher-visibility customers where the conditions are right," Charlesworth said in an interview.

Shares recently climbed 6.1% to $3.96 in premarket trading.

Krispy Kreme exited about 2,400 McDonald's locations in the U.S. during the third quarter, the company said. The burger chain started selling Krispy Kreme's doughnuts at some of its locations in late 2022, but the arrangement saddled the doughnut company with higher costs and operating challenges that led it to ax the deal last summer.

Now, the Charlotte, N.C., company is throwing more of its weight behind distribution partnerships with retailers including Costco, Walmart and Target that see a lot of shoppers every day, Charlesworth said. Krispy Kreme's doughnuts are currently only sold in about a third of Walmart locations, leaving room for expansion.

"With Krispy Kreme, people love it when they see it," Charlesworth said. "But they have to see it."

As part of its turnaround strategy, the company is focused on reducing costs and has been working to outsource the logistics around the daily delivery of its doughnuts to locations where they are sold, the CEO said. It also has been exploring how automation and AI might benefit its operations. "We're testing a few things to improve the way we schedule and delivery and optimize routes," Charlesworth said.

For the third quarter, Krispy Kreme swung to a loss of $19.4 million, or 11 cents a share. That's compared with a profit of $39.6 million, or 23 cents a share, in the same period last year, which got a one-time $87.1 million boost to its bottom line from Krispy Kreme's July 2024 sale of its majority stake in Insomnia Cookies.

Excluding one-time items, adjusted earnings were one cent a share. Analysts surveyed by FactSet had been expecting an adjusted loss of five cents a share.

Quarterly revenue fell 1.2% to $375.3 million, shy of analyst projections for $378.3 million, according to FactSet.

Losing sales from its Insomnia Cookies stake lowered the top line. On an organic basis, quarterly revenue was up about half a percentage point. The gain was primarily driven by growth in international markets, the company said.

Write to Dean Seal at dean.seal@wsj.com

(END) Dow Jones Newswires

November 06, 2025 08:12 ET (13:12 GMT)

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