Dunkin Donut’s parent company Dunkin’ Brands Group, Inc. (NASDAQ: DNKN) announced earnings last week, releasing a mixed bag for investors to pour over. The company beat Q2 estimates for earnings, but also revealed moves to slow down their aggressive expansion plan. The stock price is back to pre-earnings close at $52.52.
Comparable store sales for Dunkin Donuts increased 2% over last quarter, while the same metric for Baskin Robins saw a 9% decrease in sales, while operating income increased by 7%. The company is moving to remodel both their physical sites and their menus, with a new simplified menu being tested in locations, with another 1,000 locations to be refitted with the new menu by October. Internationally, the company faltered with sales dropping 3.2%, mainly affected by their South Korea, Southeast Asia and Europe markets. The Middle East, China and South American markets however, helped offset the losses.
Up until now Dunkin had been pursuing an aggressive expansion strategy, but the new guidance is showing signs of a rethink. Instead of the proposed 385 new locations for Dunkin Donuts stores, only 330 – 350 are being earmarked. Instead of 200 net new locations abroad, only 50 – 100 are expected to be added to the chain. Concerns about the company’s growth are also abound as Baskin Robbins is expected to continue falling in the low single digits, while Dunkin Donuts is expected to crawl upwards at a similar rate.