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Dunkin' Brands fourth-quarter profit beats; stock jumps
February 9, 2017 / 2:50 PM / 10 months ago

Dunkin' Brands fourth-quarter profit beats; stock jumps

LOS ANGELES (Reuters) - Dunkin’ Brands Group Inc (DNKN.O), owner of the Dunkin’ Donuts and Baskin-Robbins brands, on Thursday reported a higher-than-expected quarterly profit and issued a conservative 2017 forecast that analysts said left room for improvement.

FILE PHOTO - A drink and a doughnut are seen at a Dunkin' Donuts location in the Chicago suburb of Niles, Illinois, February 4, 2015. REUTERS/Jim Young/File Photo

The company’s shares were up 5.2 percent at $54.66 in morning trading.

“The initial EPS guidance for 2017 is a bit disappointing, though we see upside potential to this initial guidance,” Maxim Group analyst Stephen Anderson wrote in a client note.

Anderson said the 2017 outlook was based on 385 new stores, fewer than in 2016, and that the company’s new bottled coffee deal with Coca-Cola Co (KO.N) had the potential to boost earnings.

Meanwhile, Dunkin’ is streamlining its menus to speed up service, reduce waste and potentially reduce staff turnover by making employees’ work easier.

The company’s menus are bigger than those at rivals Starbucks Corp (SBUX.O) and McDonald’s Corp (MCD.N), Chief Executive Officer Nigel Travis said in an interview.

“That’s kind of a frightening fact,” Travis said. “We need to streamline it.”

Fourth-quarter net income attributable to Dunkin’ Brands was $56.1 million, or 61 cents per share, compared with a year-earlier loss of $8.9 million, or 10 cents per share.

Excluding special items, the profit came to 64 cents a share, which topped the analysts’ average estimate of 61 cents, according to Thomson Reuters I/B/E/S.

    Sales rose almost 6 percent to $215.7 million.

    Sales at established U.S. Dunkin’ Donuts outlets, which contribute about three-fourths of company revenue, rose 1.9 percent, just missing the analysts’ average estimate of 2.1 percent, according to Consensus Metrix.

    An increase in spending on items like Cold Brew coffee, doughnuts and the sweet black pepper bacon breakfast sandwich offset a decline in customer visits during the quarter.

    Dunkin’ forecast 2017 earnings per share of $2.34 to $2.37, excluding special items, below analysts’ estimates of $2.41.

    The company increased its quarterly cash dividend by 7.5 percent to 32 cents per share, representing a 2.5 percent yield.

    Reporting by Lisa Baertlein in Los Angeles; Editing by Lisa Von Ahn

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