Mike Arnold
Long only, small-cap, tech, growth at reasonable price

Dunkin' Brands: High-Quality Business, But Sells For Full Price

Dunkin' Brands (NASDAQ:DNKN) provided yet another example of the risk of weather-related issues in physical retail, reporting same-store sales that were up a nominal 1.2% year-over-year due to its heavy exposure to the weather affected Northeast market. In Q1, DNKN experienced 39 snow days in its two key markets, Boston and New York, largely explaining the same-store sales underperformance.

Yet, on the other hand, after considering the abnormal weather conditions experienced in Q1, DNKN is a good example of how a growing (e.g., net store count), scalable, asset light, franchise model can mitigate the impact of a decline in equity value. That is, DNKN remains entrenched in its key markets in the Northeast, and has plenty of tarmac...

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