Dunkin' Brands Sales Growth Hurt by Sale of Company-Owned Stores

Dunkin' Brands Group Inc. reported slower-than-expected sales growth as the owner of Dunkin' Donuts and Baskin-Robbins continues to sell its company-owned stores.

"We anticipate that by the end of the year, we will have fewer than five company-owned stores remaining," said Paul Carbone, chief financial officer. "While the sale of these stores impacts our revenue growth, we do not anticipate that there will be a material impact to our profits."

Dunkin' Brands said it now expects revenue for the year to rise between 3% and 5%, compared with its previous forecast for growth between 4% and 6%.

Chief Executive Nigel Travis said the company's plan to drive sales growth at its established Dunkin' Donuts U.S. stores, known as comparable-store sales, is still in its early phases and has yet to make an impact on sales. Comparable-store sales rose 0.5% in the second quarter at U.S. Dunkin' Donuts locations and 0.6% at U.S. Baskin-Robbins stores, down from growth of 2.8% and 4.1%, respectively, in the year-ago quarter.

Overall, Dunkin' Brands posted a profit of $49.6 million, or 54 cents a share, up from year-ago earnings of $42.3 million, or 44 cents a share. Per-share earnings were boosted by a decrease in shares outstanding from ongoing share repurchases.

On an adjusted basis—excluding tax adjustments, litigation and other items—the company reported per-share earnings of 57 cents a share, above the 56 cents expected by analysts and 50 cents reported in the year-ago quarter.

Sales rose 2.3% to $216.3 million, due to increased royalty income and a rise in revenue associated with Dunkin' K-Cup pod licensing. The increases were offset by a decrease in sales at company-operated restaurants and in ice cream and other products.

Analysts surveyed by Thomson Reuters had expected revenue of $220 million.

Systemwide sales, which include franchisee-operated restaurants, rose 3.8% to $2.77 billion.

Dunkin' Brands's stock has fallen 15% over the past three months. Shares were flat premarket at $47.07.

Write to Brittney Laryea at brittney.laryea@wsj.com

(END) Dow Jones Newswires

July 21, 2016 08:35 ET (12:35 GMT)

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