Dunkin' Brands to Shutter 100 Stores, Shares Tumble

Dow Jones Newswires

Dunkin' Brands Group Inc. (NASDAQ:DNKN) said growth slowed in a key sales number in the third quarter and store traffic declined, sending shares down more than 10% Thursday.

Continue Reading Below

The company, meeting with investors and analysts Thursday in New York, reiterated its sales and earnings outlook for 2015, and announced plans to close 100 Dunkin' Donut shops over the next 15 months.

The parent company of Dunkin' Donuts and Baskin-Robbins has posted lackluster sales growth in recent quarters amid a competitive breakfast environment and challenging economy.

For the third quarter, Dunkin' Brands said it expects to report same-store sales growth of 1.1% at its Dunkin' Donuts stores, which is below the 2.9% reported in the second quarter and the 2% growth seen in the year-earlier period. Analysts were expecting same-store sales growth of 2.7%, according to Robert W. Baird & Co.

The company didn't detail the reasons for the sales miss in slides filed with the Securities and Exchange Commission, but it did note a 0.7% decline in traffic at its Dunkin' Donuts stores.

Dunkin' Brands also didn't say in the slides where the store closings would occur but said the sites represent 0.1% of Dunkin' Donuts U.S. sales.

Shares of the company, which have fallen 20% over the past three months, dropped more than 10% to $43.95 in morning trading.

Dunkin' Brands affirmed its annual guidance for adjusted per-share earnings of $1.87 to $1.91 and revenue growth of 6% to 8%. The company had raised its sales and earnings outlook in April, saying it reflected the impact of its deal with J.M. Smucker Co. and Keurig to sell its Dunkin' K-Cups at retail outlets nationwide.

Dunkin' has been trying to speed service at its doughnut shops, redesigning prep stations to be faster to meet busy morning schedules. Dunkin', which gets most of its sales from breakfast, is also retooling its approach to emphasizing healthier fare and focus more on breakfast sandwiches.

What do you think?

Click the button below to comment on this article.