Dunkin' Brands Group Inc. (DNKN)

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Dunkin' Brands 3rd-Quarter Profit Rises on Stronger Doughnut Sales in U.S.

7:44 AM ET 10/25/12 | Dow Jones
By Annie Gasparro

Dunkin' Brands Group Inc.'s (DNKN) profit rose in the third quarter, fueled by its doughnut sales in the U.S., new store openings around the globe and its international ice cream business.

The parent company of Dunkin' Donuts and Baskin-Robbins began trading on the stock exchange in July 2011, and has since then seen its share price rise about 60% as the company focuses on expanding its doughnut shops westward in the U.S., improving their performance abroad, and staging a turnaround of Baskin-Robbins domestically.

Dunkin' Brands reported net income of $29.5 million, or 26 cents a share, as revenue rose 5% to $171.7 million. Excluding one-time items such as expenses related to its initial public offering last summer and debt refinancing charges, its third-quarter earnings increased 34% to $42.1 million, or 37 cents a share.

Analysts polled by Thomson Reuters were expecting a profit of 35 cents a share on revenue of $174.1 million.

Dunkin' Donuts' comparable sales, which includes those at shops open at least 54 weeks, rose 2.8% in the U.S. in the third quarter, while Baskin Robbins' inched up 1.1%. Internationally, Dunkin's comparable sales grew 2.1% and Baskin's rose 3%.

"Dunkin' Donuts U.S. comparable-store sales growth in the third quarter was driven by increased average ticket and higher traffic despite a challenging consumer and competitive environment," Dunkin' CEO Nigel Travis said in a statement. He said the chain's domestic business, which is the company's biggest contributor to profit, saw strong results from sales of its cold beverages, breakfast and lunch sandwiches, and Dunkin' branded K-Cup portion packs for Keurig single-serve brewers.

Dunkin' Brands said it now expects to report annual adjusted earnings per share of $1.25 to $1.27, a few cents higher than its previous range, but it lowered its revenue growth outlook to between 6% and 7%, from 7% to 8%, as a result of a change in ice cream manufacturing and because it expects Dunkin's U.S. same-store sales growth to be at the low end of its 4% to 5% range.

Dunkin' Brands' shares were up 1.3% in premarket trading early Thursday.

In the third quarter, Dunkin' Brands opened 187 net new restaurants across the globe, through partnerships with franchisees and licensees, to total about 17,200 locations. It now plans to open more Dunkin' Donuts shops in the U.S. than previously anticipated, to reach a total of 620 to 710 net new units globally this year.

Dunkin' Brands' operating margin rose to 41% during the quarter from 33.1%.

Dunkin' also on Thursday declared a quarterly cash dividend of 15 cents a share, payable to shareholders as of Nov. 5.

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October 25, 2012 07:44 ET (11:44 GMT)

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