Dunkin' Brands 1Q profit tops expectations as harsh weather fails to chill sales

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NEW YORK — A harsh winter in many of the U.S. regions where it operates didn't keep people away from Dunkin' Donuts over the past three months, helping to boost parent company Dunkin' Brands' quarterly profit.

The company said sales climbed 2.7 percent for established Dunkin' Donuts locations in the U.S., partly on increased beverage sales, including iced coffee, dark roast and espresso drinks.

In a phone interview, CEO Nigel Travis noted that beverages tend to be the most profitable items for franchisees, with profit margins coming in at higher than 80 percent. For sandwiches, it's about 70 percent, while doughnuts are in the mid-60s, he said.

Travis also noted that the chain has been pushing items that fetch slightly higher prices, such as a Cheesecake Square Donut.

Meanwhile, Baskin-Robbins same-store sales in the U.S. rose 8 percent during the period.

For the first quarter, profit rose nearly 12 percent to $25.6 million, or 25 cents per share. Adjusted for one-time gains and costs, earnings were 40 cents, easily topping the 36 cents per share analysts expected, according to Zacks Investment Research.

Overall revenue rose 8.1 percent to $185.9 million, helped by a licensing deal with coffee-brewing system maker Keurig. Wall Street expected $181.6 million.

Dunkin' Brands said it expects the addition of Dunkin' Donuts coffee in Keurig's single-serving K-Cups will increase overall consumption and build brand relevance.

The company said 78 new Dunkin' Donuts locations were opened in the U.S. in the first quarter and 22 Baskin-Robbins locations were opened internationally.

The company also said Dunkin' Brands president of global marketing and innovation, John Costello, will retire in the middle of 2016. The company plans to spread his responsibilities within its senior marketing leadership.

Looking ahead, Dunkin' Brands Group Inc. expects full-year earnings in the range of $1.87 to $1.91 per share.

Shares of Dunkin' Brands Group Inc. jumped more than 7 percent to $51.15.

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