Dunkin' Brands Matches EPS Estimates, Slam Dunks Revenue

Dunkin' Brands Group

is riding high on Thursday after meeting first-quarter EPS expectations and beating revenue projections. The Canton, Massachusetts-based firm's EPS rose 16 percent year-over-year to $0.29, matching analysts' estimates. Revenue increased five percent to $161.9 million, edging expectations of $161.16 million.

Comparable store sales in Dunkin' Brands' Baskin-Robbins chain declined 4.4 percent in the US after soaring 9.4 percent in 2012. Revenue in this segment dropped a more modest 2.4 percent. The company attributed the lackluster quarter to the weather, which was warmer in Q1 2012 than Q1 2013. The brand, which has roughly two-thirds of its locations outside the US, fared much better internationally. Comparable store sales grew 4.2 percent and revenue climbed 4.9 percent, primarily on ice cream sales in the Middle East.

Dunkin' Donuts experienced modest growth both in the US and abroad, with comparable store sales rising 1.7 and 1.3 percent, respectively. Revenue, however, grew by leaps and bounds, jumping 7.7 percent domestically and 17.1 percent internationally. US growth was driven by increased purchases per customer while international growth was pushed by franchise fees from renewals.

On March 7, the company announced three new presidents. Then-Chief Global Marketing and Innovation Officer John Costello was appointed as president, global marketing and innovation. Bill Mitchell, who had served as SVP and brand officer for Baskin-Robbins, was appointed president, Baskin-Robbins US & Canada. Meanwhile, Paul Twohig was named president, Dunkin' Donuts US & Canada, a role previously held by CEO Nigel Travis. Finally, the company announced three new VP's during the quarter as well as one SVP.

On March 7, Dunkin' Brands announced a master franchise joint venture with UAE-based Galadari Brothers, the parent company of Galadari Ice Cream Co (GICC)., which is a long-time licensee for the company in the Middle East. Under the agreement, the companies will open about 200 additional Baskin-Robbins locations in Australia over the next 10 years, more than tripling the brand's presence down under. Dunkin' Brands will maintain a 20 percent stake in the venture, with GICC being primarily responsible for day-to-day operations.

Dunkin' Brands' board of directors has declared a $0.19 per share second-quarter cash dividend. Shareholders of record as of the close of business on May 28 will be paid on June 6.

After hovering steady in the $37-38 range since April 17, Dunkin' Brands has climbed to around $38.75 in the morning hours of trading. The stock is up approximately three percent on Thursday.