Dunkin' Donuts reports surprise drop in U.S. store sales

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[February 04, 2016]  (Reuters) - Dunkin' Brands Group Inc reported a surprise drop in sales at established U.S. Dunkin' Donuts restaurants as price increases and intensifying competition reduced customer visits.

The company, which also owns the Baskin-Robbins ice cream chain, said in October its franchisees hiked prices by 3 percent to offset the impact of a rise in minimum wages for workers.

The launch of all-day breakfast by McDonald's Corp <MCD.N> in October and several limited-time offers by rivals such as Wendy's Co <WEN.O> and Burger King <QSR.TO> may have also hurt traffic at Dunkin' Donuts in the quarter, analysts had said.

Sales at stores open for at least 18 months fell 0.8 percent in the fourth quarter ended Dec. 26, compared with a year earlier. Analysts polled by research firm Consensus Metrix were expecting sales to increase by 0.8 percent.

The company's Dunkin' Donuts outlets in the United States account for about three quarters of its total revenue.

Nearly all of the company's more than 11,700 Dunkin' Donuts and 7,600 Baskin-Robbins restaurants are owned and operated by franchisees.

Dunkin' Brands reported a net loss attributable to the company of $8.9 million, or 10 cents per share, in the quarter, compared with a profit of $52.5 million, or 50 cents per share, in the same quarter of 2014.

The company said it took a $54.3 million impairment charge related to its Japanese joint venture.

Excluding items, the company earned 52 cents per share, above analysts' average estimate of 50 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 5.5 percent to $203.8 million, in line with the average analyst estimate of $203.3 million.

The company forecast 2016 Dunkin' Donuts U.S. comparable store sales to grow by up to 2 percent and Baskin-Robbins' to rise by 1-3 percent.

Dunkin' Brands said it expected full-year sales growth of 4-6 percent, which works out to $843.4 million-$859.6 million. Analysts were expecting $852.1 million.

The company raised its quarterly dividend to 30 cents per share from 27 cents and boosted its share buyback plan to $200 million.

(Reporting by Sruthi Ramakrishnan in Bengaluru, Editing by Anil D'Silva)

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