Domino's reports U.S. same-store sales increase and stands by forecast for food costs
- Domino's Pizza reported mixed third-quarter results Thursday morning.
- Earnings per share missed Wall Street expectations, but revenue came in above estimates.
- The pizza company also stood by its forecast for food cost inflation for the year.
Domino's Pizza on Thursday reported better-than-expected revenue for the third quarter and stood by its forecast for food costs, even though earnings fell short of estimates.
Shares of Domino's were up 9% in morning trading.
In the U.S., the company said same-store sales rose 2% in the period. Domino's had been struggling to meet the higher demand levels during the earlier days of the Covid-19 pandemic, when people were hunkering down at home and ordering in more.
During its earnings call, Domino's CEO Russell Weiner said the company will raise the price of its mix-and-match deal from $5.99 to $6.99 for carry-out purchases starting Oct. 17, after successfully hiking the price for the deal on deliveries.
"Our research showed we can do the same on the carry-out side," Weiner said.
Toward the end of the third quarter, however, Weiner said Domino's offered 20% discounts on that mix and match deal to signal solidarity with inflation-squeezed consumers.
The Ann Arbor, Michigan-based company also stood by its forecast for food cost inflation. In the previous quarter, the company had hiked its forecast for food costs to be up 13% to15% for the year.
Here's how the pizza company performed compared with Wall Street estimates, according to Refinitiv:
- Earnings per share: $2.79, adjusted vs. $2.97 expected.
- Revenue: $1.07 billion vs. $1.06 billion expected.
Overseas, the company said same-store sales declined 1.8% in the third quarter when excluding the impact of foreign currency exchanges.
The company also said it sold 114 company-owned stores in Arizona and Utah to its franchisees for $41.1 million after the third quarter ended. It said it expects to record a gain from transaction in the fourth quarter as well as reduced costs from maintaining those locations.
For the quarter ended Sept. 11, net income fell to $100.5 million, 0r $2.79 a share, from $120.4 million, or $3.24 a share a year ago. Domino's attributed the drop primarily to a higher provision for income taxes and lower income from operations.
Domino's has been hurt by rising costs and an ongoing shortage of delivery drivers that has dented sales. Shares of the Ann Arbor, Michigan-based company hit a 52 week low on Wednesday, trading at $299.41 per share. It traded as high as $567 within the last year.
Weiner warned of the macroeconomic environment during the earnings call, saying that the return of sit-down dining and inflation pressures may drive customers away from deliveries. Still, he noted that the company delivers around one out of every three pizzas in the U.S. today − similar to before the pandemic.