Restaurants

Domino's stock slips on revenue miss, weak same-store sales growth

Key Points
  • Domino's posted weaker-than-expected revenue and same-store sales growth for the second quarter, sending shares down Thursday.
  • The company's stock has risen 50 percent since the beginning of the year.
A Domino's employee preparing a pizza.
Getty Images

Shares of Domino's Pizza were down about 3 percent at the market's open Thursday after the company posted second-quarter sales that failed to hit expectations.

Domino's has had a long streak of growing same-store sales, a key metric for restaurants, in the U.S., with 29 straight quarters of positive results. The last time the company posted negative same-store sales was in the first quarter of 2011.

Overall, domestic same-store sales grew 6.9 percent in the latest period bolstered by higher checks and contributions from Domino's Piece of the Pie loyalty program.

The pizza chain said net income rose to $77.4 million, or $1.78 per share, from $65.7 million, or $1.32 per share, a year ago. Excluding items, the company earned $1.84 per share, exceeding analyst expectations of $1.75 per share, according to Thomson Reuters.

Revenue in the last period increased 24 percent to $779.4 million, falling short of the $784.6 million Wall Street had expected.

"Global retail sales remain strong as we see our franchisees building new stores, growing same store sales and bringing customers back again and again," Ritch Allison, Domino's CEO, said in a statement Thursday.

The company said that same-store sales at its company-owned stores in the U.S. grew 5.1 percent, a softer performance than the 6.6 percent growth analysts had expected, according to StreetAccount.

Domino's domestic franchise-owned stores boasted same-store sales growth of 7 percent, but were also shy of forecasts that called for same-store sales to be up 7.1 percent.

International stores saw same-store sales jump 4 percent, compared to the 5.3 percent growth that was expected. This marks nearly 25 years of positive same-store sales growth in international markets.

"Although domestic comps likely did not live up to high investor expectations (recent whispers closer to 7 to 8 percent), we view Q2 performance as very solid and reflective of ongoing brand momentum that is being supported by a multitude of internal factors that should continue to support trends in [second half 2018]," David Tarantino, analyst at Baird, wrote in a research note Thursday.

While shares were down on Thursday, the company's stock has risen 50 percent since the beginning of the year.

Programming Note: For more on Domino's, watch CEO Ritch Allison's interview on "Mad Money" tonight at 6 p.m. ET.