Krispy Kreme (NASDAQ: $DNUT) is undergoing a major turnaround, making the doughnut maker an interesting micro-cap stock to consider.
Krispy Kreme is turning around its doughnut business after years of underperformance. Management is focused on cost-cutting and restructuring the company from top-to-bottom.
Changes undertaken at Krispy Kreme include selling its stake in Insomnia Cookies, laying off corporate staff, and suspending its quarterly dividend to conserve cash.
Krispy Kreme is also transitioning to a franchise store model and moving operational risks away from head office.
And the company plans to use artificial intelligence (A.I.) to boost Krispy Kreme’s manufacturing capacity and make it more efficient.
The changes come as Krispy Kreme looks to recover from a difficult history and poor financial results in recent quarters.
The company has been publicly traded off-and-on for decades. But since returning to public markets in 2021, DNUT stock has declined 82%.
While disappointing, there is reason for optimism that Krispy Kreme is getting its act together and improving its business.
A market capitalization of only $595.64 million U.S. makes the doughnut company a micro-cap stock. And Krispy Kreme remains unprofitable. As mentioned, dividends are suspended.
Shares of Krispy Kreme have also been hurt by worries that weight-loss drugs will hurt demand for its famous hot doughnuts.
However, management at Krispy Kreme says they have not experienced any impacts form weight-loss drugs, though the company has begun selling mini-doughnuts to respond to shifting consumer preferences.
While not entirely on track, there are encouraging signs that Krispy Kreme is turning a corner and that its operations are being streamlined for future efficiencies.
DNUT stock has begun to respond, having risen 10% in the last 12 months to trade $3.45 U.S. per share. This could be the start of a long-term upward trend for the stock.
