By Will Feuer


Shares of Krispy Kreme fell in afternoon trading, giving back some of Tuesday's gains as investors digested its newly expanded tie-up with burger giant McDonald's.

The stock fell almost 12% to $15.35 in afternoon trading, after the stock gained 39% on Tuesday. From a year ago, shares are roughly flat.

Krispy Kreme on Tuesday said it struck a deal to sell its doughnuts at McDonald's restaurants across the U.S., an expansion of a partnership that the two companies have been testing over the past two years.

The deal is a boon for Krispy Kreme, which has been working to expand its distribution without driving up supply-chain costs. Krispy Kreme Chief Executive Josh Charlesworth said the partnership will double the company's distribution, currently more than 14,000 access points, by the end of 2026.

Krispy Kreme didn't provide the financial terms of the arrangement, nor did the company change its 2024 financial guidance. Truist analysts said in a note that Krispy Kreme will need to greatly expand its production capacity to serve a nationwide footprint and that there are lingering questions over how it will get fresh doughnuts to non-urban McDonald's locations.

"Expansion looks sweet but we need more sprinkles," the analysts said in a research note.


Write to Will Feuer at Will.Feuer@wsj.com


(END) Dow Jones Newswires

03-27-24 1407ET