Dunkin' Brands shares slip on soft sales in US

Key Points
  • Dunkin' Brands posted earnings that beat analyst expectations on Tuesday.
  • U.S. same-store sales for Dunkin' Donuts restaurants: Up 0.8 percent vs 0.9 percent growth projected, according to StreetAccount.
  • Dunkin' will disclose 2018 earnings guidance during its Investor Day on Feb. 8.
Dunkin’ Brands Fruited Iced Teas
Source: Dunkin’ Brands

Shares of Dunkin' Brands fell more than 3 percent on Tuesday despite the company posting fourth-quarter earnings that were better than analyst expectations.

The company, which owns Dunkin' Donuts and Baskin-Robbins, said net income rose to $195.5 million, or $2.13 per share, from $56.1 million, or 61 cents per share, a year ago.

Excluding a tax benefit of $142.4 million and other items, the company earned 64 cents per share, a penny better than analysts were expecting, according to Thomson Reuters.

Revenue in the latest period increased 5.3 percent to $227.1 million, larger than the $220.6 million Wall Street had expected.

  • Adjusted EPS: 64 cents ex. items vs. 63 cents expected according to Thomson Reuters
  • Revenue: $227.1 million vs. $220.6 million projected, according to Thomson Reuters
  • U.S. same-store sales for Dunkin' Donuts restaurants: Up 0.8 percent vs. 0.9 percent growth projected, according to StreetAccount

The company said sales growth at Dunkin' Donuts restaurants was fueled by breakfast sandwich, iced coffee and Frozen Dunkin' Coffee and doughnut sales.

Baskin-Robbins chains saw same-store sales rise 5.1 percent, a greater leap than Wall Street's expected 0.2 percent. The company said this growth was bolstered by higher checks and beverages such as shakes and smoothies.

For the full year, same-store sales were up 0.6 percent at U.S. Dunkin' Donuts locations and flat at U.S. Baskin-Robbins stores.

Dunkin' has been pressured by competitors such as McDonald's, Burger King and Starbucks, to make itself known for more than just its doughnuts.

The company has been making major changes in the last few months, ramping up its digital ordering, slowing down its expansion plans and slimming down its menu to refocus its efforts on being a beverage-led brand. And that seems to be paying off.

"Morning comparable store sales increased each quarter sequentially, and we had our highest quarterly beverage comparable sales of the year in the fourth quarter of 2017, driven by iced coffee and Frozen Dunkin' Coffee," CEO Nigel Travis said in a statement Tuesday.

The company declined to provide 2018 estimates during the earnings conference call Tuesday. Dunkin' will disclose this information at its Investor Day on Feb. 8.