Dunkin’ Brands Group (NASDAQ:DNKN) — the parent company of Dunkin’ Donuts and Baskin Robbins — reported higher-than-expected quarterly profit on Thursday. First-quarter profits stemmed from same-store sales increases at its Dunkin’ Donuts cafes and Baskin Robbins ice cream shops in the United States, allowing the company to raise its 2012 guidance.
According to the company, first-quarter sales were driven by popular breakfast menus and demand for beverages, including K-Cup portion packs used in Green Mountain Coffee Roasters’ (NASDAQ:GMCR) Keurig brewing machines. Starbucks (NASDAQ:SBUX) has also been flying high this week, and many are eagerly awaiting its first-quarter results, set to be announced after markets close on Thursday.
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Starbucks and Dunkin’ Brands both have K-Cup partnerships with Green Mountain. Dunkin’ Brands currently sells K-Cups under the Dunkin’ Donuts moniker. However, Starbucks is planning to enter the single-serve coffee market on its own, branching out from GMCR, though it plans to continue making K-Cups as well.
Whether Starbucks’ decision to enter the single-serve market will prove successful is yet to be seen. Regardless of the coffee giant’s plans, Dunkin’ Brands’ strategy is working beautifully. Dunkin’ Brands customers have gobbled up the chain’s coffee, sandwiches, and donuts, leading to a 7.2 percent increase in same-store sales at the chain during the first-quarter.
Dunkin’ Brands said it raised its full-year growth forecast for U.S. same-store sales to 4 to 5 percent at Dunkin’ Donuts, from 3.5 to 4 percent. Stemming from promotions that boosted sales in the last quarter, Dunkin’ Brands expects sales at U.S. Baskin Robbins shops to rise by 2 to 4 percent, compared with its previous forecast of no change to a rise of 2 percent. This follows the company’s announcement last month that it would pay a maiden quarterly dividend of 15 cents per share.
U.S. Dunkin’ Donuts shops account for roughly 75 percent of the company’s revenue and 85 percent of its profit. In the first quarter, U.S. same-store sales rose 7.2 percent at Dunkin’ Donuts and 9.4 percent at Baskin Robbins. Its adjusted operating margin rose to 41.3 percent, from 37.8 percent in the same quarter last year.
Dunkin’ Brands earned $26 million, or 21 cents per share, compared with a loss of $1.7 million, or 51 cents per share, a year earlier. The company earned 25 cents per share, excluding items, which was ahead of analysts estimates of 23 cents, according to Thomson Reuters I/B/E/S.
The company announced that it would continue to target opening 550 to 650 net new units globally. Additionally, Dunkin’ Brands will increase its range for revenue growth between 7 and 8 percent with adjusted operating income growth between 12 and 14 percent. The company has also announced that it has signed a partnership with Dallas Cowboys owner Jerry Jones and quarterback Troy Aikman to develop Dunkin’ Donuts restaurants in the Dallas-Fort Worth area.
Revenue rose 9.5 percent to $152.4 million, beating the average analyst forecast of $148.53 million. The company has increased its full-year adjusted earnings forecast to $1.21-$1.24 per share, from $1.19-$1.23.