Domino’s Pizza saw its shares drop in early trading after it reported third-quarter earnings that fell short of revenue expectations. The pizza chain’s cautious outlook also contributed to the decline.
For the quarter ending September 8, Domino’s reported revenue of $1.08 billion, a 4.9% increase from the previous year. This growth was mainly driven by higher revenues from supply chain operations, U.S. franchise advertising, and franchise royalties and fees. However, the revenue fell short of the consensus estimate by $20 million. The increase in supply chain revenue was largely due to higher order volume and an increase in food basket pricing to stores, though this was partially offset by changes in the product mix sold by the company. Compared to last year, Domino’s food basket pricing rose by 1.3%.
Domestic sales at company-owned stores grew by 3.1%, below the 3.5% consensus expectation.
The gross margin for U.S. company-owned stores rose by 1.0 percentage point during the quarter, primarily due to increased customer transactions. The supply chain gross margin increased by 0.6 percentage points, thanks to improved procurement productivity. Earnings per share (EPS) were reported at $4.19, compared to a consensus of $3.64 and $4.18 from the same period last year.
Looking ahead, Domino’s projects around 6% annual global retail sales growth for 2024, with expected income from operations growth of about 8%. The company also anticipates net store growth of 800 to 850 locations. For 2025, Domino’s expects similar growth in retail sales and income from operations. CEO Russell Weiner stated, “The Hungry for MORE pillar of Renowned Value will be the primary focus for our business in the near-term as we look to continue to create our own tailwinds around the world.”
In premarket trading on Thursday, shares of Domino’s Pizza were down 0.40%.
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