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Why Dunkin’ Brands Stock Fell 20% in March

By Demitri Kalogeropoulos – Apr 3, 2020 at 8:53AM

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COVID-19 mitigation efforts have pressured sales in recent weeks.

What happened

Dunkin' Brands (DNKN) shareholders underperformed a weak market last month. Their stock fell 20% compared to a 12.5% decline in the S&P 500, according to data provided by S&P Global Market Intelligence.

The slump left shares down over 33% so far in 2020, compared to a 22% drop in broader indexes.

A woman holding a to-go coffee cup.

Image source: Getty Images.

So what

The coffee and snack giant joined most restaurant industry peers in falling last month as COVID-19 forced dramatically lower customer traffic at restaurants and fast-food chains.

Dunkin' switched to carry-out and delivery service on March 17, for example, to comply with government efforts to slow the spread of the virus. Investors are worried about the loss of short-term revenue and the uncertainty around when Dunkin' will be able to reopen its full dining services.

Now what

Dunkin' reported cash holdings of over $700 million as of Dec. 28, which should help it navigate through any short-term disruption in sales. Yet it appears that aggressive social distancing efforts will last at least six weeks and produce a significant drag on its early 2020 revenue and profit trends.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends Dunkin' Brands Group. The Motley Fool has a disclosure policy.

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