Domino’s Pizza reported a stronger-than-expected first-quarter earnings performance, with a 21% year-over-year increase in earnings per share (EPS) to $4.33, surpassing analysts’ estimates of $4.05. However, the company’s revenue of $1.11 billion rose just 2.5% from the previous year, falling short of the projected $1.12 billion.
The company’s U.S. comparable sales dropped by 0.5%, a significant decline compared to 5.6% growth in the same quarter last year. Meanwhile, international same-store sales rose by 3.7%, outperforming the 0.9% growth seen in the previous year.
Despite the earnings beat, the company faced operational challenges, particularly in its domestic market. Company-owned U.S. stores experienced a 1.5% decline in gross margin, primarily due to rising food costs. Domestic franchise comparable sales fell by 0.4%, compared to an expected 0.36% increase, while company-owned stores saw a more pronounced 2.9% decline, well beyond the anticipated 0.35% decrease.
International Growth Offsets Domestic Weakness
On a global scale, Domino’s saw total retail sales increase by 4.7% year-over-year to $4.46 billion, driven largely by international markets. Despite challenges posed by foreign currency fluctuations, the company’s international operations performed strongly, with comparable sales growth of 3.7%, far outpacing the estimated 1.88% growth.
In a statement, CEO Russell Weiner highlighted the company’s ability to maintain market share amid a challenging global environment: “Sustained market share growth reflects a company’s ability to control what is under its control, a key to long-term success. In the face of a challenging global macroeconomic environment, our Hungry for MORE strategic pillars are working together to drive MORE sales, MORE stores, and MORE profits annually.”
Stock Performance and Outlook
Despite the earnings beat, Domino’s shares have been under pressure, trading near levels that have historically acted as resistance. Technical indicators suggest that investors may target a retest of the 30- and 50-day simple moving averages (SMAs), with potential for a trend reversal. The Relative Strength Index (RSI) shows bullish divergence, and the Moving Average Convergence Divergence (MACD) is widening, indicating potential bullish momentum in the stock.
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