April 24, 2014 / 10:56 AM / 4 years ago

UPDATE 2-Dunkin's results miss as cold weather chills U.S. sales

(Adds CEO comment, context on industry pricing)

April 24 (Reuters) - Dunkin’ Brands Group Inc, the parent company of Dunkin’ Donuts and Baskin-Robbins ice cream stores, on Thursday reported lower-than-expected quarterly results as extreme cold weather put a chill on U.S. customer visits.

The Canton, Massachusetts-based company said it was holding a firmer line on prices than rivals such as McDonald’s Corp , which is getting pinched by record beef costs.

Sales at established Dunkin’ Donuts outlets in the United States rose 1.2 percent in the first quarter, missing analysts’ estimate for a 3.4 percent rise, according to Consensus Metrix.

“The first quarter was very difficult” due to the barrage of winter storms, particularly in the U.S. Northeast, where most Dunkin’ Donuts outlets are located, Chief Executive Nigel Travis told Reuters in an interview.

Dunkin’ Donuts domestic coffee shops account for about 75 percent of the company’s total sales. The company estimated that weather resulted in a 200 basis point drag on U.S. same-restaurant sales in the quarter.

Top U.S. rival McDonald’s Corp, which has been doubling down on breakfast and coffee, said this week that sales at U.S. restaurants open at least 13 months fell a steeper-than-expected 1.7 percent in the first quarter.

McDonald’s reported a 3 percent rise in prices in its latest quarter, as the hamburger chain attempted to recoup higher costs for beef and other meats. But traffic fell in the quarter, suggesting possible push-back from customers, many of whom are feeling the squeeze of stagnant wages and higher costs for gasoline and food.

Dunkin’ Donuts’ U.S. prices were up less than 1 percent in the latest quarter, due to internal cost controls as well as less reliance on commodities such as beef, Travis said.

“We don’t have to resort to pushing prices the way some people may,” he said.

The value-focused company will maintain prices on beverages, such as its popular coffee, but could raise prices on items like breakfast sandwiches, Travis said.

Dunkin’s net income fell slightly more than 3 percent to $23 million, or 21 cents per share, in the first quarter that ended March 29. Revenue rose 6.2 percent to $171.9 million.

Excluding items, the company earned 33 cents per share. Analysts on average had expected 36 cents per share, according to Thomson Reuters I/B/E/S.

The company reaffirmed its profit forecast for the year.

Shares Dunkin’ Brands were down 1.2 percent at $47.01 in midday trading. (Reporting by Lisa Baertlein in Los Angeles and Maria Ajit Thomas in Bangalore; Editing by Don Sebastian and Leslie Adler)

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