Dunkin' Brands reported a bigger than expected fourth-quarter profit, lifted by higher prices and a shift in consumer preferences.
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The Canton, Massachusetts-based restaurant chain's fourth-quarter profit jumped 8.5 percent year-over-year to $57.7 million, or 69 cents a share, as revenue rose 5.1 percent to $335.9 million. Adjusted earnings of 73 cents a share were ahead of the 69 cents that analysts surveyed by Refinitiv were expecting. Revenue was shy of the $336.1 million that was anticipated.
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"All business segments delivered positive comparable store sales growth in the fourth quarter and for the fiscal year, reflecting broad-based momentum across the system," CEO Dave Hoffman said in a press release.
U.S. comparable sales at Dunkin' rose 2.8 percent year-over-year, the strongest fourth-quarter growth in six years, as slower traffic was offset by an increase in the average ticket size, which was driven by premium-priced expresso and cold brew beverages and the Beyond Sausage sandwich.
Meanwhile, U.S. comparable sales at Baskin-Robbins grew 4.1 percent versus a year ago, supported by strength in cups and cones, beverages, take home and sundaes.
Dunkin' raised its quarterly dividend by 7.3 percent to 40.25 cents a share, and announced a $250 million stock buyback program.
Looking ahead, Dunkin' sees low single-digit comparable sales growth for both Dunkin' U.S. and Baskin-Robbins U.S. Adjusted earnings are expected at $3.16 to $3.21 a share, shy of the $3.29 that analysts were expecting, according to FactSet.
Dunkin' expects to open between 200 and 250 new stores in 2020, which will contribute more than $140 million in sales.
Dunkin' shares were up 2.2 percent this year through Wednesday, slightly underperforming the S&P 500’s 3.2 percent gain.