Breakfast Sandwiches, Coffee Sales Lead Dunkin’ To Profitability In Q2’16, Even As The International Segments Suffer
Dunkin’ Brands (NASDAQ: DNKN) released its June quarter earnings on 21st July ’16, reporting a slight increase in revenues, partially offset by traffic deceleration in the quick service restaurants (QSR) and restaurant marketplace in the U.S. In terms of bottom-line, Dunkin’ saw a 23% y-o-y growth in its EPS, supported by the company’s share buyback program and favorable comparisons, facilitated by the closure of its Canadian ice-cream plant and the final settlement of its Canadian pension plan in Q2’15.
The growth in the top-line was primarily fueled by the growth in comparable store sales (0.5% y-o-y) at Dunkin’ U.S. and Baskin Robbins U.S. While Dunkin’ U.S. comp store sales growth came from strong beverage sales, and newly introduced breakfast sandwiches, like GranDDe Burrito and the Bacon Supreme Omelet, Baskin’s U.S. comps were driven by the new Warm Cookie Ice Cream Sandwich. However, the company’s international segments continued to be weighed down due to foreign currency headwinds and sales declines in South Korea and Europe.
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The focus in the quarter had been on growing its coffee segment (with the launch of cold brews), opening new restaurants (mainly in the U.S. and China), and driving comps higher through digital innovation and better restaurant experience. Moreover, the company continues to work on selling all of its company-operated restaurants or converting them into franchisees by the end of 2016. This, as a result, may soften the company’s year-end revenue growth. Keeping this in mind, Dunkin’ has revised its annual revenue growth guidance from 4% – 6% to 3% – 5%.
Going forward, the company will remain focused on its five-part plan of driving its coffee leadership, fastest market product innovation, targeted value offerings and everyday smart pricing, increased use of digital technologies, and an improved restaurant experience. In line with this strategy, Dunkin’ targets spreading the reach of its newly launched cold brew coffee across the nation by the end of the summer, evolving its menu to improve the quality and taste by introducing higher quality better tasting eggs, reformulated bagels, and revamping its bacon.
Have more questions on Dunkin’ Brands (DNKN)? See the links below.
- Dunkin’ Brands’ Q2 FY’16 Earnings Preview: Product And Digital Innovation To Support Earnings
- Dunkin’ Brands To Enjoy Robust Revenue Growth In 2016, Despite International Segments Struggling in First Quarter
- What Is Dunkin’ Brands’ Revenue & EBITDA Breakdown?
- By What Percentage Have Dunkin’ Brands’ Revenues And EBITDA Grown Over The Last Five Years?
- How Has Dunkin’ Brands’ Revenue And EBITDA Composition Changed Over 2011-2015?
- Where Will Dunkin’ Brands’ Revenue And EBITDA Growth Come From Over The Next Three Years?
- Dunkin’ Brands’ FY 2015 Earnings Review: Dunkin’ Donuts US & K-Cups Drive Revenue Growth, Baskin-Robbins International Struggles
- Dunkin’ Brands’ Q1 FY’16 Earnings Preview: All Eyes On Comp Sales Growth Of International Segments
- What’s Dunkin’ Brands’ Fundamental Value Based On Expected 2016 Results? (Updated After Q1 2016 )
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