Domino’s Pizza trims store openings target, misses sales estimates; shares tumble

9:36 am Thursday, July 18th, 2024

By Juveria Tabassum

(Reuters) -Domino’s Pizza will open fewer stores than expected in its international markets, it said on Thursday, as the pizza giant battles muted demand from cost-conscious consumers, sending its shares down 12% in early trading.

The pizza giant also warned of sequentially slower comparable sales for the third quarter and fell short of same-store sales expectations for the three-month period ended June 16.

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 Domino’s Pizza Enterprises is the largest franchisee for the brand and has more than 3,800 stores in 12 international markets, according to Domino’s Australia’s website.

“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.

The company also suspended its target of having 1,100 global net new stores through 2024 to 2028.

Domino’s U.S. same-store sales rose 4.8%, lagging expectations of 4.9%. International same-store sales increased 2.1%, compared to estimates of 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 resilience.

Domino’s CEO Russell Weiner said Americans continued to look for value. The company has catered to this demand through its refreshed loyalty program and offers such as the carry-out “boost” weeks that provide 50% week-long discount.

The company said it would have one boost week each in the third and fourth quarters, compared with the two boost weeks in the reported period.

Still, lower supply-chain costs helped the company earn a profit of $4.03 per share, compared with expectations of $3.68.

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