Domino’s Pizza forecast sequentially slower Q3 comparable sales on Thursday and trimmed its target for new international store openings. The sales miss sent the share price of Domino’s down by 13%. Domino’s Pizza fell short of estimates for quarterly same-store sales as inflation worries discouraged U.S. consumers, particularly in the lower-income group, from eating out or ordering in.
Sequentially slower growth in food services in June showed consumers were still looking to stretch their budgets as they recovered from high inflation, despite a better-than-expected overall U.S. retail sales report signaling economic resilience.
Domino’s sales miss target
The company’s target of opening more than 925 international outlets for the year is expected to fall short by about 275 after its Australia-based master franchisee said earlier this week it was closing low-volume stores in Japan and France.
Domino’s Pizza Enterprises is the brand’s largest franchisee and has more than 3,800 stores in 12 international markets, according to Domino’s Australia’s website.
“The market is anxious about risk going forward that this type of headwind will spread to more markets beyond Japan and France,” Northcoast Research analyst Jim Sanderson said.
The company also suspended its target of having 1,100 global net new stores through 2024 to 2028. It currently has more than 14,000 international stores.
Domino’s quarterly report
For the U.S. market, it expects comparable sales to rise 3% or more in the third and fourth quarters, compared with 4.8% reported in the second quarter.
Domino’s CEO Russell Weiner said Americans continued to look for value. The company has catered to this demand through its refreshed loyalty program and offers such as the carry-out “boost” weeks that provide a 50% week-long discount.
However, Domino’s will have one boost week each in the third and fourth quarters, compared with two boost weeks in the reported period.
Domino’s revenue
Domino’s reported total revenue of $1.10 billion in the second quarter, roughly in line with estimates.
The company maintained its long-term outlook of more than 7 per cent annual global retail sales growth.
“It’s a little bit of a surprise … I think we were assuming that the level of promotional intensity would probably kind of maintain the same cadence across all different quarters,” said Danilo Gargiulo, senior analyst at Bernstein.
The company missed expectations for U.S. and international same-store sales by a small margin.
Domino’s Pizza stock update
The pizza retail chain Domino’s Pizza share plummeted more than 13% coming down to a price of $409.04 after posting mixed Q2 results. Domino’s reported lower supply-chain costs helped the company earn a profit of $4.03 per share, compared with estimates of $3.68, according to LSEG data.
