Krispy Kreme Slips After JPMorgan Downgrade, Cites ‘Survivor Mode’ Post McDonald’s Fallout

JPMorgan stated that it believes Krispy Kreme's proposed turnaround plan carries execution risk, as declining trends in the U.S. business limit its visibility.

Krispy Kreme (DNUT) shares were down nearly 3% during midday trading on Wednesday after JPMorgan downgraded the stock to ‘Underweight’ from ‘Neutral’ rating, noting that the doughnut maker was in a "survivor mode" following the cancelled launch at fast-food chain McDonald's (MCD).

JPMorgan said that it believes Krispy Kreme's proposed turnaround plan brings execution risk as declining trends in the U.S. business limit its visibility, as per TheFly. 

Retail sentiment on Krispy Kreme improved to ‘bullish’ from ‘bearish’ territory a day ago, with message volumes at ‘low’ levels, according to data from Stocktwits.

In June, Krispy Kreme announced the decision to end its partnership with McDonald's effective July 2. In April, Krispy Kreme had said it was reassessing the deployment schedule and cost-sharing for the program together with McDonald’s.

The partnership was struck last year in March and allowed the sale of Krispy Kreme’s donuts in over 14,000 McDonald's stores in the U.S. Krispy Kreme CEO Josh Charlesworth, in June, called the partnership "unsustainable" for the doughnut company, as it was unable to bring costs in line with unit demand.

The New York Times reported on Monday that Krispy Kreme is making a push to get its doughnuts into more big-box retailers such as Costco (COST), Kroger (KR) and Walmart (WMT).

Krispy Kreme stock has lost 64% so far this year and declined 67% in the last 12 months.

For updates and corrections, email newsroom[at]stocktwits[dot]com.<