Domino’s Pizza to open fewer stores in 2024; misses sales estimates

8:27 am Thursday, July 18th, 2024

By Juveria Tabassum

(Reuters) – Domino’s Pizza said on Thursday it would open fewer stores than expected in its key international markets as the pizza giant struggles with muted demand from cost-conscious consumers.

Shares of Domino’s fell nearly 12% in premarket trade as the world’s biggest pizza company also reported quarterly same-store sales below expectations.

Domino’s said its target to open more than 925 international outlets for the year would fall short by about 275 after its Australia-based master franchise said earlier this week it was closing low-volume stores in Japan and France.

The company also suspended its long-term target of having 1,100 global net stores.

“That’s a little bit of a concern because international unit growth was a kind of a key component of the company’s long-term growth strategy,” Northcoast Research analyst Jim Sanderson said.

Domino’s reported a 4.8% rise in U.S. same-store sales, lagging expectations of 4.9%. International same-store sales rose 2.1%, while analysts were expecting 2.5%, according to LSEG data.

Sequentially slower U.S. growth in food services in June signaled consumers were still trying to stretch their budgets, despite a better-than-expected overall U.S. retail sales report pointing to economic resilience.

The pizza company has been catering to consumers looking for cheaper options through its refreshed loyalty program in the U.S. as well as several offers to draw in customers.

Analysts, however, had expected tougher competition for Domino’s this quarter, as fast-food peers also ramped up deals and promotions on their menu items.

Still, lower supply-chain costs and resilience in its same-store sales in the U.S. helped the company earn a profit of $4.03 per share, compared with market expectations of $3.68.

Domino’s reported total revenue of $1.10 billion in the second quarter, largely in line with estimates, and maintained its long-term outlook of more than 7% annual global retail sales growth.

(Reporting by Juveria Tabassum; Editing by Vijay Kishore and Pooja Desai)