The Exchange

Dunkin' Brands shares slip as results dinged by winter storms

A customer enters a Dunkin' Donuts store Monday, Oct. 31, 2011, in Atlanta. Dunkin' Brands Group Inc., the parent of Dunkin' Donuts and the Baskin-Robbins ice cream chain, said Tuesday, Nov. 1, 2011, that its net income plummeted 61 percent in the July-to-September quarter, as the company paid charges related to going public and paying down debt. (AP Photo/John Bazemore)
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A customer enters a Dunkin' Donuts store Monday, Oct. 31, 2011, in Atlanta. Dunkin' Brands Group Inc., the parent of Dunkin' Donuts and the Baskin-Robbins ice cream chain, said Tuesday, Nov. 1, 2011, that its net income plummeted 61 percent in the July-to-September quarter, as the company paid charges related to going public and paying down debt. (AP Photo/John Bazemore)

Dunkin' Brands (DNKN) missed analysts' first-quarter financial estimates, but the coffee and doughnut seller stayed with its full-year predictions for profits and store growth, helping mitigate the damage to its shares.

The Canton, Mass.-based company, which owns the Dunkin' Donuts and Baskin-Robbins brands, earned 33 cents a share in the quarter, before certain items, up from 29 cents in the year-earlier period. Revenue was $171.9 million, 6.2% ahead of last year's $161.9 million. However, Wall Street was looking for a bit more  a profit 36 cents and revenue of $172.4 million.

Sales from franchisees, who make up virtually all the system, rose to $2.18 billion from $2.09 billion last year. After the report, shares of Dunkin' were down 1.8% to $46.72. The stock has lost 3.7% so far this year, trailing the S&P 500's 1.5% gain, but outperforming the declines in Krispy Kreme (KKD) and Tim Hortons (THI).

The winter drag

As with most restaurants, winter weather was a drag on the results. For Dunkin' Donuts U.S., the company's largest division, comparable store sales growth was 1.2%. Still, that was a function of higher average prices being paid at the register. The number of customers at stores was "marginally negative" as ice and snow dented visits, Dunkin' said.

Dunkin', a participant in the so-called breakfast wars by virtue of its goods and operating hours, said iced coffee and espresso were strong, as were sliced turkey and eggs Benedict sandwiches.

For the full year, Dunkin' didn't change its expectations, despite the first-quarter setback. Dunkin' Donuts U.S. comparable-store sales growth should be 3% to 4%, and domestic Baskin-Robbins same-store sales growth likely will be 1% to 3%. Dunkin' Donuts U.S. probably will add 380 to 410 new restaurants to its total, including California expansion plans. Around the world, a total of 685 to 800 new Dunkin' Donuts and Baskin-Robbins are set to open.

Earnings, on an adjusted basis, are still on track to be $1.79 to $1.83 a share, the company says. The Wall Street forecast is $1.82.