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Dunkin’ Brands brews stronger earnings

by Nicole Marsh
Jan 31, 2013


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Nicole Marsh/MEDILL

Dunkin Brands' shares have strengthened in recent months 

The parent company of Dunkin’ Donuts and Baskin-Robbins posted a big jump in fourth-quarter earnings Thursday, but underlying profitability rose more modestly.

“Despite macro-economic instability and a tough competitive environment,” said CEO Nigel Travis, “demand for Dunkin’ Donuts is high.”

In the latest quarter Dunkin’ Brands Group Inc. had net income of $34.3 million, or 32 cents per diluted share, up significantly from the year-ago quarter’s $11.6 million, or 10 cents per share.

Excluding one-time items, most notably an $18.8 million impairment charge incurred in the prior year related to the company’s investment in a South Korean joint venture, diluted adjusted earnings per share totaled 34 cents, up from 30 cents in the year-ago period. That’s a penny better than the 33 cents analysts surveyed by Bloomberg were expecting.

Revenues fell 4 percent to $161.7 million from $168.5 million last year.

The quarter benefited primarily from stronger sales in the company’s U.S. doughnut shops and the contribution from new stores the company has been opening in both domestic and international markets. .

For the doughnut division, “comparable store sales,” or sales from doughnut shops opened more than 54 weeks in the U.S., increased 3.2 percent.

“Despite a lackluster economic environment, successful new products, including limited-time offers, supported by solid marketing initiatives drove higher average ticket and traffic at Dunkin’ Donuts U.S.,” said Morningstar Inc. analyst Joscelyn MacKay in an online commentary.

Comparable same-store sales from the parent’s ice cream shops inched up 1.5 percent.

Dunkin Brands’ also opened 256 new restaurants worldwide, including 149 new Dunkin’ Donuts in the U.S.

For the upcoming year the company said it expects adjusted earnings per share of $1.48 to $1.51. That’s in line with analyst expectations for earnings of $1.52 per share. Dunkin’ Brands said it plans to open 730 to 860 new restaurants worldwide this year, including 330 to 360 new outlets in the U.S.

The company also said Thursday that it is boosting its quarterly dividend to 19 cents per share from the former 15 cents. The dividend is payable on Feb. 20 to holders of record on Feb. 11.

During all of 2012, Dunkin’ Brands earned $108.3 million, or 93 cents per diluted share, up twofold from net earnings of $34.4 million; because of the impact of a dual-class stock system at the company common shares showed a oss of $1.41 per diluted share, in the 2011 year.

Revenues rose 4.8 percent to $658.2 million from 628.2 million in 2011.

Dunkin’ Brands shares rose 2.04 percent to close at $36.51 Thursday.