Key Takeaways
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Domino’s Pizza reported strong third-quarter profit- as order volumes increased.
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The pizza delivery giant’s gross margin at U.S. company-owned stores was up 1.0 percentage point.
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However, revenue came up short of forecasts, and it gave soft guidance because of what it called a “challenging economic environment.”
Domino’s Pizza (DPZ) shares fell Thursday morning when the pizza delivery giant’s better-than-expected profit was offset by a revenue miss and soft guidance.
The company reported third-quarter earnings per share (EPS) of $4.19, $0.59 above the consensus estimate of analysts surveyed by Visible Alpha. Revenue was up 5.1% year-over-year to $1.08 billion, but that was short of forecasts.
Domino’s said the performance was driven primarily by higher revenue from its supply chain, U.S. franchise advertising, and U.S. franchise royalties and fees. The company noted the supply chain gains came mostly from a rise in order volumes and an increase in the “food basket pricing to stores.”
Gross margin at U.S. company-owned stores climbed 1.0 percentage point, which it attributed to “sales leverage due to higher customer transaction counts.”
Chief Executive Officer (CEO) Russell Weiner explained that the results demonstrated the company’s strategy is working “despite a pressured global marketplace.”
Domino’s Cuts Outlook on ‘Challenging Macroeconomic Environment’
Domino’s warned that full-year performance will be affected by a “challenging macroeconomic environment and its impact on current business trends across the globe.” It now sees 2024 global retail sales growth of 6%, down from at least 7%.
Shares of Domino’s Pizza, which were basically flat year-to-date through Wednesday’s close, slipped about 2% soon after the opening bell.
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