Dunkin’ Donuts shares slip on soft sales in U.S.

Dunkin’ Brands Fruited Iced Teas

Source: Dunkin’ Brands
Dunkin’ Brands Fruited Iced Teas

Shares of Dunkin’ Donuts fell more than 3 percent in premarket trading on Tuesday despite the company posting fourth quarter earnings that were better than analyst expectations.

The coffee and doughnut chain 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 compared to $220.6 million projected, according to Thomson Reuters
  • U.S. same-store sales for Dunkin’ restaurants: Up 0.8 percent vs 0.9 percent growth projected, according to StreetAccount

Same-store sales for the quarter were up 0.8 percent for U.S. Dunkin’ Donuts chains, just shy of analysts’ expectations of 0.9 percent growth, according to StreetAccount. Dunkin’ said sales growth 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 like 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 like McDonald’sBurger 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.

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