Domino’s Pizza tried to reassure buyers Thursday that it has extra progress forward regardless of snapping a longtime streak for U.S. same-store gross sales progress.
Traders listened, sending shares up 2% in morning buying and selling after the inventory fell as a lot as 5% earlier than the market opened.
Domino’s earned $3.24 per share in the course of the third quarter, topping the $3.11 per share anticipated by analysts surveyed by Refinitiv.
Regardless of slowing U.S. same-store gross sales progress, analysts discovered vibrant spots within the firm’s earnings report.
“[U]nit improvement continues to be a major driver of progress,” BTIG analyst Peter Saleh wrote in a be aware to purchasers Thursday. “[M]omentum has returned to convey the present tempo to six.5%, margin efficiency was respectable given the gross sales outcomes and the corporate has been aggressively repurchasing its inventory not too long ago.”
The pandemic introduced skyrocketing demand for Domino’s pizza in its dwelling market, however as customers have been vaccinated and states relaxed restrictions, buyers started to fret about pizza fatigue. Final quarter, regardless of going through robust comparisons, U.S. same-store gross sales nonetheless rose 3.5%.
The corporate’s third quarter, nevertheless, noticed its home same-store gross sales flip damaging for the primary time since 2011. U.S. same-store gross sales shrank by 1.9%, though the metric was up by 15.6% on a two-year foundation. StreetAccount anticipated the corporate to report U.S. same-store gross sales progress of 1.8%.
CEO Ritch Allison stated “a really difficult staffing setting” put strain on U.S. transactions. Some places needed to shorten hours, for instance. Executives stated they’re taking steps to enhance their labor challenges, together with rolling out a brand new applicant monitoring system and updating franchisees on methods to most effectively use their employees’ time.
“There isn’t any doubt that we are going to proceed to expertise challenges with Covid, with staffing and different components. We additionally anticipate inflationary headwinds to proceed impacting Domino’s and the broader restaurant trade over the approaching quarters, however we’ll face all of those challenges and headwinds from a place of energy,” Allison instructed analysts.
Allison additionally stated U.S. gross sales have been harm by the waning affect of stimulus checks, which had largely tapered off by the third quarter this yr.
The decline in U.S. demand led the pizza chain to fall in need of Wall Avenue’s income estimates. Analysts surveyed by Refinitiv had forecast web gross sales of $1.04 billion, however Domino’s reported $998 million in income for the quarter.
Outdoors the U.S., the corporate’s enterprise is faring significantly better. Worldwide same-store gross sales climbed 8.8% within the quarter, up 15% on a two-year foundation.
Though Domino’s shares have been down greater than 5% at one level in premarket buying and selling Thursday, the inventory has climbed 27% this yr, bringing its market worth to $18 billion.
Learn Domino’s press launch.