Domino's sales growth, profit disappoint, shares fall 8 percent - Metro US

Domino’s sales growth, profit disappoint, shares fall 8 percent

FILE PHOTO - A Domino's Pizza restaurant is seen in Los Angeles, California, U.S. July 18, 2018. REUTERS/Lucy Nicholson/File Photo GLOBAL BUSINESS WEEK AHEAD

(Reuters) – Domino’s Pizza Inc missed Wall Street estimates for quarterly same-store sales growth on Thursday as it battled competition from food delivery companies and rival pizza chains, sending its shares down 8 percent.

Same-store sales at Domino’s company-owned U.S. outlets rose 3.6 percent, the slowest pace in at least four years, while franchises posted 5.7 percent growth in the fourth quarter, both well below Wall Street expectations.

Analysts on average had expected same-store sales to rise 6.60 percent at company-owned U.S. stores and 7.25 percent at franchise stores, according to IBES data from Refinitiv.

Domino’s has led the way among pizza chains with investments in technology, cutting delivery times below 30 minutes and making its overall operation more efficient as it faces the threat of delivery “disruptors” like GrubHub and UberEats.

The tech-led changes in delivery have still hurt it and rivals Papa John’s and Yum Brands’ Pizza Hut by making more restaurants’ food easily accessible to customers sitting at home on the couch.

Higher investments in tech initiatives and other strategic areas led to a near 15 percent rise in general and administrative expenses for Domino’s in the quarter.

U.S. restaurants have been also been facing stagnant sales and weak traffic as they face rising food and wage costs, hurting their profitability.

Revenue from the international business, which is run by franchisees but provides Domino’s with revenue from ingredients, equipment and royalties, fell nearly 3 percent on the back of gains for the dollar.

International same-stores sales rose yet again, but growth of 2.4 percent was below expectations of 4.14 percent.

The company operates 5,876 stores, both company owned and franchises, in the United States and over 10,000 outlets in international markets.

Total revenue rose to $1.08 billion but fell short of analysts’ average estimate of $1.10 billion for the second consecutive quarter.

(Reporting by Aishwarya Venugopal in Bengaluru; editing by Patrick Graham and Saumyadeb Chakrabarty)

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