Dunkin’ Brands reports strong Q4, fiscal year 2013 results
Canton, Mass. – Dunkin’ Brands Group Inc., parent company of Dunkin’ Donuts and Baskin Robbins, reported an impressive set of year-over-year financial results for the fourth quarter and fiscal year 2013. During the quarter, net income grew 23% to $42.1 million from $34.2 million, and revenue increased 13% from $161.7 million to $183.2 million.
U.S. same-store sales for the quarter increased 3.5% at Dunkin’ Donuts and 2.2% at Baskin Robbins.
During the full fiscal year, net income rose 36% to $146.9 million from $108.3 million and revenues increased 8% to $713.8 million from $658.2 million. U.S. same-store sales rose 3.4% at Dunkin’ Donuts and 0.8% at Baskin Robbins.
According to Dunkin’ Brands, Dunkin’ Donuts U.S. same-store sales growth in the fourth quarter was driven by increased average ticket and higher traffic resulting from its focus on operational excellence and product and marketing innovation, while Baskin Robbins same-store sales growth was driven by a focus on returning and new holiday flavors, new cake designs and take-home ice cream quarts. Fourth quarter revenues resulted primarily from increased royalty income due to systemwide sales growth, increased franchise fees due to favorable development mix and incremental franchise renewals, and increased sales of ice cream products. Quarterly net income primarily grew as a result of a $14.5 million increase in operating income and a $2.0 million decrease in interest expense. This was offset by a $7.6 million increase in income tax expense and greater losses on foreign currency due to exchange rate fluctuations.
"We are steadfastly committed to driving profitable growth for both our franchisees and our shareholders, a commitment we delivered on yet again in our second full year as a public company," said Paul Carbone, CFO, Dunkin’ Brands Group Inc. "As a result of strong topline sales growth and our intense focus on restaurant-level returns, franchisee profitability for both brands is healthier than it’s ever been. Additionally, our nearly 100% franchised, asset-light business model enabled us to return more than $100 million to shareholders in 2013 through our quarterly dividends and ongoing share repurchases. We’re also excited to announce the board of directors’ decision to increase our first quarter dividend more than 20% over our fourth quarter 2013 dividend."
Looking ahead, Dunkin’ Brands expects the following results for fiscal year 2014:
- Dunkin’ Donuts U.S. same-store sales growth of 3 to 4% and Baskin-Robbins U.S. same-store sales growth of 1% to 3%.
- Between 380 and 410 net new U.S, Dunkin’ Donuts restaurants representing greater than 5% net restaurant growth, five to 10 net new Baskin-Robbins U.S. restaurants.
- Internationally, the company is targeting opening 300 to 400 net new restaurants across the two brands, inclusive of the anticipated closing of approximately 100 small, kiosk locations in the Philippines throughout the year. The closure of these locations is immaterial to Dunkin’ Donuts International business segment profit.
- Globally, the company expects to open between 685 and 800 net new units.
- Revenue growth of between 6% and 8%.
Fairway seeks CEO
Fairway Group Holdings’ Herbert Ruetsch plans to retire after 15 years with the company, including the last two years as its CEO. Ruetsch will remain a special adviser to the company and continue to provide input into certain merchandising and product initiatives.
"Herb Ruetsch has helped lead Fairway through a major transformation from a small family business into an iconic, growing specialty food retailer serving some 20 million customer visits annually in the tri-state area. All of us at Fairway would like to thank Herb for his many contributions to our success," said Charles Santoro, executive chairman. "Bill Sanford, our Interim CEO, brings continuity, strong leadership and organizational skills, and has also played a very important role in Fairway’s growth, development and success during his last five years at Fairway, including his previous roles as CFO and most recently as president."
William Sanford, who has served as the company’s president since April 2012, will assume the role of Fairway’s interim CEO. He joined the company in October 2008 as chief administrative officer and served as CFO from September 2011 to December 2012. From 1998 to June 2008, he held various senior positions, including CFO, president and chief operating officer with Interline Brands, a New York Stock Exchange listed company. He has more than 25 years of experience in the wholesale distribution field, having also held senior positions with Airgas and MSC Industrial Direct.
Fairway also announced the promotions of Kevin McDonnell to co-president and chief operating officer and Edward Arditte to co-president and CFO.
"Kevin and Ed work very closely together and these promotions are designed to bolster and enhance operations and productivity initiatives as Fairway prepares to roll out its production center and important new store openings later this calendar year,” added Santoro. “Kevin has worked at Fairway for the past six years and has more than 30 years of experience in food retailing. Kevin will be responsible for all merchandising and store operations and Ed will assume responsibility for all other corporate functions. We believe that our senior leadership team is extraordinarily strong, focused and determined and that these changes help take us to the next level in our organization’s growth and in enhancing our ability to execute to very demanding goals."
McDonnell has served as the company’s SVP and chief operating officer since April 2012. Prior to this, he was chief merchandising officer from August 2007 to April 2012. Previously, he served in various capacities at the Great Atlantic & Pacific Tea Company for more than 27 years, most recently as SVP of sales and merchandising.
Arditte has served as EVP and CFO of Fairway since December 2012. He has more than 25 years of finance and operating experience with large, multi-industry companies including Tyco International, where he served from May 2003 to May 2010 as a SVP with responsibility for strategy, investor relations and communications. Immediately prior to joining Tyco International, he served as the CFO of BancBoston Capital. He also spent 16 years at Textron, where he served in a variety of management roles including VP and treasurer and CFO of a major operating division.
Fairway’s board of directors plans to search for a CEO in the near future, and will consider qualified individuals in and outside of Fairway.
The announcements come following the company’s third quarter results for the period ended Dec. 29, 2013. The company reported a net sales increase of 22.9% to $205.7 million from $167.3 million in the third quarter of fiscal 2013. Net sales growth in the quarter was driven primarily by the new stores opened subsequent to Sept. 29, 2012 and the net sales from the Red Hook, Brooklyn, location, which was closed for the last nine weeks of the third quarter in the prior year.
"During the quarter, we grew our revenues and market share, made progress on a number of long-term margin initiatives and enhanced the visibility of our real estate pipeline,” said Santoro about the company’s financial results. “While our business faced a number of headwinds during the quarter including a tougher comparison over last year, the compressed holiday shopping season and a generally softer retail backdrop, we remain excited about our long-term growth prospects. We have also strengthened our senior leadership structure, and announced several important promotions to enhance operations and productivity initiatives as Fairway evolves to the next level of growth and scale. Fairway’s differentiated food retail platform remains well positioned to capture incremental market share as we continue to expand our store base and capitalize on the shifting consumer focus towards healthy living and value."
Report: CVS tobacco decision spurs social media discussion
Woonsocket, R.I. – The Feb. 5 decision by CVS to stop selling cigarettes and other tobacco products by October 2014 reportedly created a large volume of related discussion on social media. According to analysis from social media analysis technology provider Crimson Hexagon, as of 6 p.m. on Feb. 5, there were more than 139,000 total posts on Twitter (92% of the conversation) and public Facebook (8% of the conversation) posts mentioning CVS.
Top hashtags associated with the social conversation surrounding CVS include #CVS (more than 13,000 mentions) and #CVSquits (more than 10,000 mentions) Regarding CVS/pharmacy’s Twitter account, @CVS_Extra, from Jan. 29 to Feb. 4 the handle averaged 200 – 300 daily interactions, which includes mentions, retweets and @replies. Feb. 5 alone, @CVS_Extra experienced exponentially more engagement with more than 17,000 interactions, which includes mentions, retweets and @replies.