Krispy Kreme (DNUT) will look to take a price increase in September as it battles to protect margins from higher costs for key commodities such as edible oils and sugar.
CEO Mike Tattersfield said on Yahoo Finance Live the price hikes won't be exorbitant, owing likely to the price sensitive consumer that frequents the donut-hawking brand.
"We are really disciplined on pricing. We are a dozens business, so we do always pay attention to an accessible price point. So when you think about the pricing that will happen on a dozen you won't really see it that much," explained Tattersfield on the looming price increases.
Tattersfield said the cost for an individual donut will still be about a $1.
"We do have pricing power, and we are really thoughtful," Tattersfield added.
Despite the pressure on the business, Krispy Kreme notched a solid second quarter — its first since going public in July.
Organic sales growth clocked in at 22.5% from a year ago as the company gained more shelf space at the likes of Walmart in the U.S. and also saw strength at international stores. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rose 77.8% year-over-year.
Here is how Krispy Kreme performed compared to Wall Street estimates for the second quarter:
Net Sales: $349.2 million vs. $333 million
Adjusted EPS: $0.13 vs. $0.14
Krispy Kreme shares settled at $13.77 in Wednesday's session, below the $17 pricing of its IPO. The stock had hit a high of more than $21 soon after its July market debut.
For the full year, Krispy Kreme sees sales rising 19.4% to 23% to a range of $1.34 billion to $1.38 billion. Adjusted EBITDA is expected to be in a range of $178 million to $185 million, or up 22.4% to 27.2% from a year earlier.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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