Domino’s Pizza on Thursday reported mixed quarterly results as the pizza chain struggled with higher costs and an ongoing shortage of delivery drivers.
The Ann Arbor, Michigan-based company also said it’s expecting food costs to keep rising and foreign currency exchange rates to drag down its international revenue more than previously forecast.
Shares of Domino’s were down almost 3% at $400.10 in pre-market 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: $2.82 vs. $2.91 expected
- Revenue: $1.07 billion vs. $1.05 billion expected
Net income in the three-month period ended June 19 was $102.5 million, or $2.82 per share, down from $116.6 million, or $3.06 per share, a year earlier.
“We continued to navigate a difficult labor market, especially for delivery drivers, in addition to inflationary pressures combined with COVID and stimulus-fueled sales comps from the prior two years in the U.S.,” CEO Russell Weiner said in a statement.
Net sales rose 3.2% to $1.07 billion. Domino’s largely attributed the increase in sales to the higher food costs it’s charging franchisees. This quarter, operators paid 15.2% more than they did a year ago.
But the company’s same-store sales fell at home and abroad during the quarter. In the U.S., same-store sales fell 2.9% as it faced tough comparisons in the year-ago period, which was boosted by stimulus checks and people ordering more pizza at home.
Wall Street was expecting domestic same-store sales growth of 5%, according to StreetAccount estimates.
International same-store sales, excluding foreign currency changes, declined 2.2%. Domino’s said a tax holiday in the United Kingdom drove sales higher a year ago, but the country didn’t repeat it this year. Analysts were forecasting roughly flat same-store sales growth for the chain’s international unit.
The company opened 233 net new stores this quarter, the vast majority of them overseas.
For fiscal 2022, Domino’s is now expecting food basket prices to climb 13% to 15%, up from its prior forecast of 10% to 12%. The company also said that foreign currency exchange rates will weigh on its revenue by $22 million to $26 million, up from its previous outlook of $12 million to $16 million.