CHARLOTTE, NC. — A class-action lawsuit claims Krispy Kreme, Inc. gave “false and/or misleading statements and/or material omissions” about its McDonald’s partnership, causing the plaintiffs, or those who recently acquired Krispy Kreme stock, to suffer damages. The lawsuit, which was filed May 16 in the US District Court, Western District of North Carolina, seeks compensatory damages and a jury trial.

David Cameron was listed as the lead plaintiff in the lawsuit, which was filed on behalf of people and entities that purchased or otherwise acquired Krispy Kreme securities between Feb. 25 and May 7. Defendants are Krispy Kreme, Inc.; Josh Charlesworth, chief executive officer of Krispy Kreme; and Jeremiah Ashukian, chief financial officer of Krispy Kreme.

Krispy Kreme did not respond to a request for comment.

McDonald’s restaurants in Louisville, Ky., and the surrounding area began selling Krispy Kreme donuts on Oct. 26, 2022. On March 26, 2024, the two companies released plans to expand the partnership nationally beginning in the second half of 2024.

A sign that the partnership was not going exactly as planned came in a Feb. 25 earnings call to discuss financial results for the fiscal year ended Dec. 29, 2024. Charlesworth said that when local marketing faded at McDonald’s restaurants already offering Krispy Kreme donuts, the donuts were not as visible on the menu and consumer awareness dropped. Fourth-quarter net revenue declined 10.4% when compared to the previous year’s fourth quarter, primarily due to the sale of a majority ownership stake of Insomnia Cookies (a $101 million impact) and a cybersecurity incident (an $11 million impact), according to Krispy Kreme.

From Feb. 27 to May 7, Krispy Kreme made false and/or misleading statements, according to the lawsuit. Krispy Kreme, according to the lawsuit, failed to disclose that demand for Krispy Kreme products declined materially at McDonald’s locations after the initial marketing launch; that demand at McDonald’s was a driver of declining average sales per door per week; that the partnership with McDonald’s was not profitable; that the foregoing posed a substantial risk to maintaining the partnership with McDonald’s; that, as a result, the company would pause expansion into new McDonald’s locations; and that, as a result of the foregoing, Krispy Kreme’s positive statements about its business, operations and prospects were materially misleading and/or lacked a reasonable basis.

The lawsuit stated that Charlesworth and Ashukian “possessed the power and authority to control the contents of the company’s reports to the SEC (Securities and Exchange Commission), press releases and presentations to securities analysts, money and portfolio managers and institutional investors, i.e., the market.”

Krispy Kreme’s securities traded at “artificially inflated” prices from Feb. 27 to May 7, an action that damaged financially those who purchased Krispy Kreme’s securities during that time, according to the lawsuit. Krispy Kreme’s stock traded as high as $7.13 per share on Feb. 25.

On May 8, Krispy Kreme released its first-quarter results with net revenue at $375.2 million, down 15.3% when compared with the previous year’s first quarter, and a net loss of $33.4 million, which compared with a net loss of $6.7 million in the previous year’s first quarter. Krispy Kreme donuts, which were in over 2,400 McDonald’s at the end of the quarter, would enter no further McDonald’s in the second quarter, according to Krispy Kreme, which withdrew its prior full-year outlook due to macroeconomic softness and uncertainty around the McDonald’s deployment schedule.

Krispy Kreme’s stock price on the Nasdaq fell nearly 25% on May 8 to close at $3.26 per share. The stock price closed at $3.14 per share on May 20.