* Third-quarter profit tops Wall Street estimate
* Raises 2012 forecast for U.S. Dunkin' Donuts unit growth
* Shares up more than 1 percent
By Lisa Baertlein
Oct 25 Dunkin' Brands Group Inc on
Thursday raised its full-year profit forecast after share
buybacks and steady sales at U.S. Dunkin' Donuts restaurants
bolstered third-quarter results amid stiff competition in its
core U.S. market.
Shares in the company, which gets almost 75 percent of
revenue and more than 80 percent of profit from its domestic
Dunkin' Donuts cafes, were up 1.6 percent in midday trading on
The U.S. economy appeared to weaken in early September,
prompting major quick-service chains such as McDonald's Corp
and Starbucks Corp to step up promotions, said
Nigel Travis, chief executive of Dunkin' Brands and president of
the U.S. Dunkin' Donuts operation.
"If you all respond at the same time, it makes life very
competitive," said Travis, who said he does not expect the
recent uptick in economic activity to reduce that pressure.
McDonald's, the world's biggest fast-food chain, last week
posted its smallest quarterly restaurant sales growth in nine
years. Analysts say it will use its size and abundant resources
to keep an edge over rivals.
Dunkin' Donuts' third-quarter sales at established
restaurants were roughly in line with analysts' expectations.
The chain is responding to the rise in competition without
moving into the "discount category," Travis said.
"We're easing people in with a little bit more aggressive
promotions. This is giving us a slightly sharper edge," Travis
said. The coffee and doughnut chain's promotions include digital
coupons and limited-time offers on items like pumpkin spice
coffee K-Cups for Green Mountain Coffee Roasters Inc's
popular Keurig brewers.
Dunkin' Donuts, McDonald's, Starbucks and other fast-food
chains have been expanding their menus to attract customers who
are spending cautiously in a weak economy. As a result, most
chains are selling coffee drinks, blended beverages like
smoothies and frappes, as well as a variety of sandwiches and
DUNKIN' DONUTS GROWS IN U.S.
Canton, Massachusetts-based Dunkin' Brands, which also owns
Baskin-Robbins ice cream, raised its 2012 profit forecast to
$1.25 to $1.27 per share, from $1.22 to $1.25 previously. The
new forecast is on track with analysts' current estimates.
It expects sales growth at established U.S. Dunkin' Donuts
restaurants to be at the low end of its 4-5 percent target range
for the full year.
When Dunkin' Brands went public in July 2011, it set a
20-year target for 15,000 U.S. Dunkin' Donuts stores. That
target would give the chain more domestic outlets than Starbucks
and more than double its presence in the United States.
On Thursday, the company increased its 2012 forecast for net
new U.S. Dunkin' Donuts restaurants to a range of 280 to 300,
from 260 to 280 previously.
Those new cafes are expected to drive growth for Dunkin'
Brands, one of the most successful restaurant initial public
offerings in recent history.
Third-quarter net income jumped to $29.5 million from $7.4
million a year earlier.
Dunkin' Brands earned 37 cents per share in the latest
quarter, excluding items. That beat analysts' expectations by 2
cents a share, according to Thomson Reuters I/B/E/S, helped by
Revenue rose 5 percent to $171.7 million, falling short of
Wall Street estimates of $174.9 million.
Same-restaurant sales at U.S. Dunkin' Donuts were up 2.8
percent during the quarter, just missing the 2.9 percent gain
analysts polled by Consensus Metrix had expected.
Shares in Dunkin' Brands were up 48 cents at $31.29, well
above their $19 IPO price last summer.