With U.S. stores reopening after the coronavirus-induced shutdowns, Dunkin' Brands Group, Inc. DNKN is ramping up preparations to make it a success. Notably, the company announced plans of hiring up to 25,000 new employees to meet the spike in demand upon reopening. Following the announcement, shares of the company rose 4.2% during trading hours on Jun 8.
With states reopening and businesses continuing with investments in delivery and curbside pick-up, employment prospects in the Zacks Retail-Wholesale sector are looking up. Notably, the restaurant industry added approximately 1.4 million jobs in May, bringing the total unemployment rate to 13.3% compared with 14.7% in April.
Nonetheless, with 90% of its U.S. restaurant locations open, the new job role ranges from front-of-counter to managerial roles at restaurants. To this end, the company is partnering with Southern New Hampshire University to offer low-cost online college education to employees who want to improve their skillset. Notably, the advertising campaigns will be launched in Spanish and English for recruitment purposes.
Dunkin’ Brands’ senior vice president and chief human resources officer, Stephanie Lilak stated,“ We are proud to support our franchisees who offer much-needed job opportunities, in a welcoming environment where people can feel appreciated and rewarded for serving both customers and their communities during this critical time.”
So far this year, shares of Dunkin' Brands have fallen 5.7% compared with the industry’s decline of 2.1%.
Strategic Measures to Tide Over the Pandemic
Dunkin' Brands has taken certain strategic measures to protect the business in this crisis. These include temporary extension of payment terms for royalties and advertising fees for franchisees in the United States and Canada, enabling more financial flexibility to support employees and guests. Additionally, it waived up to one month of rental payments and allowed franchisees to defer two months of rent on approximately 900 properties leased by the company to franchisees. Notably, this is in line with its motive of preserving cash and maintaining ample liquidity to avoid a possible recession due to the coronavirus outbreak.
Although the virus has triggered a catastrophe in terms of lives lost and financial impact, the company appears resilient enough to navigate through these uncertain times. We believe that it will continue to monitor the COVID-19 crisis and adjust contingency plans accordingly.
Zacks Rank & Key Picks
Dunkin' Brands currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Retail-Wholesale sector are Sprouts Farmers Market, Inc. SFM, Domino's Pizza, Inc. DPZ and Yum China Holdings, Inc. YUMC. Sprouts Farmers sports a Zacks Rank #1, while Domino's and Yum China carry a Zacks Rank #2 (Buy).
Sprouts Farmers has a three-five year earnings per share growth rate of 4.4%.
Domino's has a trailing four-quarter positive earnings surprise of 12.7%, on average. The company’s earnings beat the Zacks Consensus Estimate in the last four quarters.
Earnings in 2021 for Yum China are expected to surge 79.4%.
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