Domino’s Pizza fell short of market expectations for second-quarter same-store sales on Thursday as US consumers, particularly in the lower-income group, spent less on eating out or ordering in.
Sequentially slower growth in food services in June indicated that consumers were still looking to stretch their budgets as they recover from a period of high inflation, even as a better-than-expected overall US retail sales report signalled economic resilience.
Domino’s US same-store sales growth of 4.8 per cent in the quarter fell just short of expectations of growth of 4.91 per cent, according to LSEG data.
The company has been catering to consumers looking for cheaper options through its refreshed loyalty program in the US as well as several offers to draw in customers.
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Analysts, however, had expected tougher competition for Domino's this quarter as fast-food peers also ramped up value offerings and promotions.
Still, a streamlined supply chain and resilience in its same-store sales in the US helped the pizza maker earn a profit of $4.03 per share, compared with market expectations of $3.68.
“We had positive order counts in our delivery and carry-out businesses, and across all income cohorts. Our strategy is resonating with customers,” said Russell Weiner, Domino's chief executive officer.
Robust advertising revenue and franchise royalties and fees also helped second-quarter gross margin rise to 39.8 per cent from 39.5 per cent a year ago.
Domino's maintained its long-term outlook of more than 7 per cent annual global retail sales growth.
The company reported total revenue of $1.10 billion in the second quarter, roughly in line with estimates. – Reuters
