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TheStreet Open House

Baskin-Robbins Ice Cream Can't Help Dunkin' Brands in Fight with Starbucks

Stocks in this article: DNKNSBUX

NEW YORK (TheStreet) -- Ice cream is in season, but Dunkin' Brands (DNKN) owner of the Baskin-Robbins franchise, is having a hard time generating profit, especially internationally.

Sluggish ice-cream sales added to weakness at the coffee counter as Dunkin' Donuts continues to struggle in its protracted battle with Starbucks (SBUX) and other coffee chains. Canton, Mass.-based Dunkin' lowered its full-year adjusted earnings forecast to $1.73 to $1.77 per share on sales growth of 5% to 7%, a cut from its previous outlook of earnings of $1.79 to $1.83 per share on sales growth of 6% to 8%.

Baskin-Robbins U.S. system-wide sales growth rose a modest 2% while comparable-stores sales growth posted a 1.6% increase. Baskin-Robbins U.S. second-quarter revenue increased just 3.7% from the prior year period to $13 million. Internationally, Baskin-Robbins system-wide sales growth declined 3.8%, comparable store sales 3.6%.

Poor performance by the company's Baskin-Robbins joint-venture in Japan and decreased profits from the sale of ice cream in the Baskin-Robbins international business contributed to the lower numbers.

Overall revenue for Dunkin' rose 4.6% to $191 million. Shares tumbled 4.4% to $42.01 extending its 2014 decline to 13% compared to a 7.6% rise in the S&P 500 .

This all comes as July is National Ice Cream Month when Americans consume on average 48 pints of ice cream each per year. Dunkin' Brands has attempted to turn the ice cream business from a strictly summertime cash cow into a year-round profit-making enterprise, and the international store expansion has been a major part of this plan.

So maybe this is why many ice cream shops are independently owned today. Baskin-Robbins' struggles reflect the difficulties in taking the ice cream franchise to a national scale, and later international. At the end of the day, at least for now, ice cream may be a matter of mom-and-pop shops, local tastes and flavors.

The companies showcased here probably won't be going public on the market anytime soon, but they have managed to draw attention from all across the globe, proving they know a thing or two about the ice cream business.

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