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By Praveen Paramasivam
(Reuters) – Krispy Kreme Inc forecast stronger annual revenue after beating second-quarter estimates on Tuesday, betting on its online business, drive-thru and new menu items to soften any hit from the COVID-19 Delta variant.
The doughnut maker’s shares rose 2% in extended trading after its first earnings report since returning as a listed company in July. The company also said it plans to raise prices in September to offset higher labor and commodity costs.
Major U.S. restaurants including McDonald’s Corp (NYSE:MCD) and Starbucks (NASDAQ:SBUX) have doubled down on their online businesses to cut wait times for delivery and drive-thru, hoping that the lockdown-driven shift to eating at home more is here to stay.
With the highly contagious Delta coronavirus variant driving a resurgence in cases worldwide, using multiple channels for delivery is key, Krispy Kreme Chief Executive Officer Mike Tattersfield told Reuters in a call.
“You could be closing down your front door but using your drive-thru or using your e-commerce model or using your ‘Delivered Fresh Daily’ model in the grocery business.”
The “Original Glazed” doughnut maker forecast annual net revenue between $1.34 billion and $1.38 billion, as much as 23% higher than last year and compared with Refinitiv IBES estimates of $1.34 billion.
Across the sector, the easing of coronavirus curbs, reopening of offices and new menu items have allowed chains like Starbucks, McDonald’s and Wendy’s (NASDAQ:WEN) Co to serve up strong forecasts.
Krispy Kreme has also added new items including doughnuts dipped in Hershey Co (NYSE:HSY)’s chocolate icing to draw in returning customers.
It expects to pay a cash dividend of 3.5 cents per share for the quarter ending Oct. 3, the company said.
Net revenue rose 42.6% to $349.2 million in the second quarter ended July 4 versus estimates of $333.4 million.
Excluding items, it earned 13 cents per share, in line with expectations.
