Dunkin’ Brands profit climbs 8% in second quarter
BakingBusiness.com, July 26, 2012
by Eric Schroeder

CANTON, MASS. — Net income of Dunkin’ Brands Group, Inc. in the second quarter ended June 30 was $18,497,000, up 8% from $17,162,000 in the second quarter of fiscal 2011.

Total revenues were $172,387,000, up 10% from $156,972,000, while operating income at Dunkin’ in the second quarter fell 25% to $46,138,000 from $61,794,000.

For the six months ended June 30, net income was $44,447,000, up 188% from $15,439,000 in the same period a year ago. Total revenues were $324,759,000, up 10% from $296,185,000.

“Tomorrow (July 27) marks our one-year anniversary as a publicly-traded company,” said Nigel Travis, chief executive officer, Dunkin’ Brands Group, Inc., and president, Dunkin' Donuts U.S. “We believe our strong performance to date clearly demonstrates the platform for growth that we laid out at the time of our I.P.O. For the quarter, our franchised business model continued to generate consistent revenue growth and high-margins, resulting in a 32% increase in adjusted earnings per share. Additionally, our focus on store-level economics, best-in-class product and marketing innovation, and operational execution drove comparable store sales increases across all business segments.

“We also continued to capitalize on our significant growth prospects in the U.S. and internationally and by the end of the quarter had more than 17,000 restaurants worldwide.”

Dunkin’ Donuts U.S. had operating profit of $89,918,000 and total revenues of $122,606,000 in the second quarter, which compared with $82,605,000 and $110,226,000, respectively, in the same period a year ago.

The company said Dunkin’ Donuts U.S. comparable store sales grew 4% in the second quarter. Second-quarter gains were driven by “increased average ticket and higher traffic. The growth resulted from strong beverage sales growth led by cold beverages, including Black Cocoa Creme Iced Coffee as part of the Men in Black 3 promotion and a national 99c Iced Tea offer; differentiated breakfast sandwich offerings such as the new Breakfast Burrito in steak and veggie varieties as well as the continuation of the Angus Steak, Egg and Cheese Breakfast Sandwich; continued growth in bakery sandwiches; sales of Dunkin’ Donuts K-Cup portion packs; and the ‘What Are You Drinkin’ marketing campaign.”

Baskin-Robbins U.S. operating profit was $8,860,000, up 25% from $7,101,000 in the same period a year ago. Total revenues were $12,740,000, down narrowly from $12,822,000.

Dunkin’ Donuts International posted operating profit of $1,933,000, down 39% from $3,150,000 in the same period a year ago. Total revenues were $3,870,000, up 1% from $3,831,000.

Baskin-Robbins International second-quarter 2012 segment profit was $11,842,000 on total revenues of $30,106,000. This compared with profit of $10,279,000 and revenues of $26,939,000 in the same period a year ago.

On July 18 Dunkin’ said it will close its Baskin-Robbins manufacturing facility in Peterborough, Ont., by October. The facility supplies ice cream to certain international markets. The ice cream that had been produced in Peterborough now will be made by Dean Foods, Dunkin’ said. The closing is expected to result in charges of $16 million to $18 million, of which $4 million will be a non-cash charge, the company said.

“We have made significant progress in driving supply chain efficiencies for both Dunkin’ Donuts and Baskin-Robbins while maintaining our high product quality,” said Neil Moses, chief strategy officer for Dunkin’ Brands. “Our decision to close our Baskin-Robbins plant in October is in keeping with this strategy. Moving our international ice cream production to a trusted, long-term dairy manufacturing partner is aligned with our asset-light model and is expected to generate significant annual savings for the company. Most importantly, this transition will enable us to provide better support for our growing international Baskin-Robbins business.”