What Happened?
Shares of doughnut chain Krispy Kreme (NASDAQ: DNUT) jumped 3.4% in the morning session after investors reacted positively to news that its UK division has initiated a multi-year turnaround plan to drive sustainable, profitable growth.
The move follows a challenging financial year for the UK arm, which reported a loss after tax of £6.2 million for 2024, a significant shift from the profits recorded in the three preceding years. The company attributed the loss to the impact of the cost-of-living crisis on consumer spending, coupled with higher input costs. Under new management, the turnaround strategy includes reviewing retail locations to better align with customer presence, redeveloping its customer rewards platform to boost loyalty, and taking measures to control costs by locking in contracts for input price stability.
After the initial pop the shares cooled down to $3.73, up 0.9% from previous close.
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What Is The Market Telling Us
Krispy Kreme’s shares are extremely volatile and have had 30 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock dropped 3.2% on the news that markets continued to decline, as investors grew cautious ahead of a key speech by Federal Reserve Chair Jerome Powell.
The move came as U.S. equity markets recorded a fifth consecutive day of losses for major indexes like the S&P 500, with technology stocks experiencing the largest declines. Investors have grown wary that the sharp rally in the tech sector since April may have advanced too far. The market-wide caution is largely driven by the upcoming Jackson Hole symposium, a meeting of central bankers, where traders are anxiously awaiting Fed Chair Powell's speech on Friday for guidance on the future path of interest rates.
Krispy Kreme is down 61.7% since the beginning of the year, and at $3.73 per share, it is trading 70% below its 52-week high of $12.42 from November 2024. Investors who bought $1,000 worth of Krispy Kreme’s shares at the IPO in June 2021 would now be looking at an investment worth $177.38.
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