Krispy Kreme’s Brazil Expansion Offers A Sweet Spot After Brutal Q4 Print, But Retail Stays Cautious

The store will open in the Avenida Juscelino Kubitschek neighborhood in São Paulo in late April. The expansion is through a minority-interest joint venture with convenience store chain AmPm.

Shares of Krispy Kreme Inc. (DNUT) rose 1.6% on Monday after the company announced the opening of its first store in Brazil.

The confectionery chain said the store will open in the Avenida Juscelino Kubitschek neighborhood in São Paulo in late April. The expansion is through a minority-interest joint venture with convenience store chain AmPm.

AmPm is Brazil's largest convenience store chain, with approximately 1,500 locations nationwide. Ipiranga, a Brazilian fuel company, owns AmPm's Brazilian operations.

Krispy Kreme said it would utilize AmPm's network to open more stores through a "capital-light franchise strategy."

The brand has over 30 international franchise partners worldwide and operates in 40 countries.

The expansion news comes just weeks after a disappointing earnings report, that pulled the company's shares to an all-time low.

Last month, Krispy Kreme forecasted full-year revenue between $1.55 billion and $1.65 billion, implying a decline from 2024 and below a FactSet estimate of $1.76 billion.

Its adjusted earnings per share view of $0.04 to $0.08 was far below the consensus estimate of $0.30.

The company said its outlook resulted from soft demand and the lingering effects of a cyber-attack last year that also weighed its results last quarter.

In Q4, the company earned $0.01 per share, on an adjusted basis, on revenue of $404 million, below Wall Street targets on both parameters.

After the report, shares plunged about 35% over the subsequent two sessions in late February.

According to Koyfin data, short interest in Krispy Kreme shares has risen to 12.9% at the end of last week from 10.9% at the start of the year.

On Stocktwits, retail sentiment dropped to ‘neutral' from ‘bullish' the previous day, while message volume remained ‘low’. 

User comments were mixed. One said that Krispy Kreme is preferred over Dunkin' Donuts and the former's stock is currently undervalued.

Another user noted that Krispy Kreme products were poorly stacked at a local Meijer store, which limits discovery and sales.

Shares are down 43.7% year to date.

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