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Why Dunkin' Brands Stock Lost 13% in December

By Demitri Kalogeropoulos – Updated Apr 11, 2019 at 10:58PM

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The coffee and snack chain got caught up in surging market volatility last month.

What happened

Shares of Dunkin' Brands (DNKN) trailed the market last month, shedding 13% compared with a 9% slump in the S&P 500, according to data provided by S&P Global Market Intelligence.

The drop wasn't enough to keep the coffee chain from outperforming for the full 2018 calendar year, though, as it finished flat even as the market declined by 6%.

Glazed donuts.

Image source: Getty Images.

So what

Dunkin' Brands didn't release any operating updates, so much of its December drop can be blamed on the historic decline in the broader market. There was little for investors to worry about in its last quarterly report, published in late October, which marked its second straight quarter of modest sales growth at existing locations.   

Now what

Dunkin' is making several aggressive moves aimed at improving its business fundamentals. In December it launched espresso-based coffee drinks across all of its locations in a bid to extend beyond the drip coffee it is known for. The chain has also released new snack options in recent months to try to steal market share in the afternoon hours.

These initiatives, should they work, will help the company push its store base westward to break out of its current East Coast focus. Rival chains like McDonald's and Starbucks aren't going to allow the encroachment to go unchallenged, though, and so investors will be watching for signs of winners and losers in this growing market-share battle in upcoming earnings reports.

Check out the latest Dunkin' Brands earnings call transcript.

Demitrios Kalogeropoulos owns shares of McDonald's and Starbucks. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool recommends Dunkin' Brands Group. The Motley Fool has a disclosure policy.

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