MW Krispy Kreme's sales fell again. Here's why it was good for the stock this time.

By Tomi Kilgore

Doughnut seller's stock is headed for one of its biggest rallies ever after a big profit beat and signs that turnaround efforts are taking hold

Krispy Kreme's stock was soaring Thursday as fourth-quarter results provide signs that a turnaround may be starting to take hold.

Shares of Krispy Kreme were headed for a historic gain in early Thursday trading after the donut seller beat fourth-quarter profit expectations by the widest margin in its recent history as a publicly traded company and provided an upbeat sales growth outlook.

And while sales fell from a year ago for the sixth straight quarter, it was because the company (DNUT) has been closing underperforming U.S. stores and was not a sign of declining demand.

The company also provided a full-year outlook that implied an acceleration in sales growth, a sign that the turnaround plan the company launched in August 2025 was taking hold.

The stock soared 22.7% in premarket trading toward a six-week high. That put it on track for its third biggest one-day gain since it went public for a second time in July 2021, and the best performance since it shot up 26.7% on July 22, 2025.

Krispy Kreme's turnaround plan was launched after the stock suffered through a rough first half of 2025, plunging 70.7% through June 30. That weakness was highlighted by the end of the company's partnership with McDonald's $(MCD)$, which didn't make money, and a string of disappointing earnings reports, as well as the elimination of a dividend.

There was a brief period in July 2025 when the stock took part in the "meme stock" frenzy. That helped kick off a bit of a stock rebound in the second half of the year, but selling resumed in 2026, and the stock dropped 25.6% year to date through Wednesday.

For the quarter to Dec. 28, net revenue was down 2.9% from a year ago to $392.4 million, but that beat the average analyst estimate compiled by FactSet of $386.6 million.

CEO Josh Charlesworth said that "although our decision to exit underperforming U.S. doors resulted in a modest decline in net revenue," the move has boosted profits.

He noted that adjusted earnings before interest, taxes, depreciation and amortization - a measure of underlying profitability of a business - improved 21% to $55.6 million, the highest seen in three years.

And adjusted earnings per share, which excludes nonrecurring items such as store-closure costs, rose to 9 cents from 1 cent and beat the FactSet EPS consensus of 3 cents. The margin of that beat was the widest since the company returned to the public market.

For 2026, the company expects total sales, when excluding the effects of currency moves, to grow 2% to 4%, compared with the 0.7% growth seen in 2025.

Krispy Kreme's second stint as a public company hasn't gone very well. On Wednesday, the stock closed 85.8% below where it closed on its first day of trading on July 1, 2021, at $21.

The first stint ended in July 2016, when Krispy Kreme was acquired by JAB Beech to end about a 16-year run as a public company.

-Tomi Kilgore

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February 26, 2026 09:31 ET (14:31 GMT)

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