Domino's Pizza turned in a softer-than-hoped first quarter on Monday, giving executives around the Ann Arbor area headquarters a bit less to celebrate. U.S. same-store sales crept up just 0.9%, and diluted earnings per share slipped compared with a year ago. All of it hit as rivals pull back and discount deals crowd an already cutthroat pizza market.
In a company press release, Domino's said total revenues rose 3.5% to $1,150.6 million while net income fell 6.6% to $139.8 million and diluted EPS eased to $4.13 from $4.33 a year earlier, according to PR Newswire. The release shows global retail sales growth of 3.4%, U.S. same-store sales up 0.9%, and global net store growth of 180 locations, including 19 net openings in the U.S. The board also signed off on an additional $1.0 billion share repurchase program and declared a $1.99 quarterly dividend as part of its capital allocation playbook.
Wall Street Shrugs At Lukewarm Slice
Shares slipped after the numbers hit, with Bloomberg noting the company missed expectations for comparable sales growth. Analysts had penciled in stronger comps and a slightly higher EPS line, according to Zacks, which made investors especially touchy about any hint of a soft quarter. Traders and analysts now have their eyes on whether promotional pressure and lower traffic prove to be a brief wobble or the front edge of a more persistent slowdown.
Domino’s Spin On The Slowdown
Chief executive Russell Weiner tried to keep the tone upbeat, saying the quarter "represented another quarter of positive order count and market share growth" even as he pointed to an "intensifying macro and competitive environment," language the company used in its release to frame the modest comps. Management argued that Domino's scale, digital ordering muscle, and store-level profitability should help the chain defend its turf as the pizza wars heat up.
Ann Arbor Feels The Heat
For franchisees and employees in and around Ann Arbor, the update is a mixed bag. Domino's notched net U.S. openings in the quarter, even as some rivals keep trimming weaker shops. Pizza Hut has said it will close roughly 250 U.S. outlets, and Papa John's plans to shut about 300 stores over the next two years, per reporting by Restaurant Business and CBS News. Local coverage from Crain's Detroit Business noted that the results highlight how national pricing moves and promotions can ripple directly back to Domino's Michigan headquarters and its franchise system.
Next Moves On The Menu
Investors will be zeroed in on any guidance tweaks, the company's read on U.S. traffic trends, and whether the current wave of promotions starts to calm down. Domino's is set to host an earnings webcast and post its formal filings on its investor site, ir.dominos.com. If comps hold steady and the chain keeps grabbing market share without giving up too much margin, management argues Domino's is positioned to outlast weaker competitors, and says the next two quarters will tell the tale.
