Domino's Pizza earnings miss as U.S. same-store sales growth slows, pizza chain's shares fall

Domino's Pizza earnings miss as U.S. same-store sales growth slows, pizza chain's shares fall

An employee removes a pizza from the oven at a Domino’s Pizza restaurant in Rantoul, Illinois.

Daniel Acker | Bloomberg | Getty Images

Domino’s Pizza on Thursday reported quarterly earnings that missed estimates as pandemic costs weighed on profits and U.S. same-store sales growth slowed.

The pizza chain also released a new outlook for the next two to three years.

Shares of the company fell about 6% in premarket trading.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: $3.46 adjusted vs. $3.89 expected
  • Revenue: $1.36 billion vs. $1.39 billion expected

The pizza chain reported fiscal fourth-quarter net income of $151.9 million, or $3.85 per share, up from $129.3 million, or $3.12 per share, a year earlier. Performance-based expenses and costs related the coronavirus pandemic, including enhanced pay and bonuses for restaurant workers, weighed on profits.

Excluding the impact of a 53rd week, Domino’s earned $3.46 per share, missing the $3.89 per share expected by analysts surveyed by Refinitiv.

Net sales rose 17.9% to $1.36 billion, falling short of expectations of $1.39 billion. The extra week added about $88 million in sales.

U.S. same-store sales increased by 11.2%, down from third quarter’s 17.5% growth. CEO Ritch Allison said on the conference call that the lack of stimulus checks and enhanced unemployment benefits meant customers were more cash strapped during the fourth quarter. He also noted that the resurgence of Covid-19 cases in November and December hit its carryout business.

International same-store sales climbed by 7.3%, its highest quarterly result in four years.

Domino’s also said it made a $40 million investment in Dash Brands, the privately held company that serves as the pizza chain’s franchisee in China. Domino’s first invested in Dash in the second quarter of 2020, acquiring a noncontrolling stake for $40 million.

The company’s new two- to three-year outlook projects net unit growth of 6% to 8% and global retail sales growth of 6% to 10%, excluding foreign currency. Allison told analysts that the company would keep investing in technology and focusing on value in 2021.

“More than ever, with many Americans out of work and these uncertain economic times, value matters,” he said.

A day before the earnings report, its board reauthorized $1 billion in stock buybacks.

Rival Papa John’s on Thursday also reported quarterly earnings that missed estimates.

Read the full report here.