Domino’s turns to personal orders as US comparable sales barely grow
Domino’s US same-store sales grew just 0.3 per cent in the third quarter, compared with 5.2 per cent a year earlier. More orders were partly offset by smaller purchases. Chief executive Joe Jordan outlined more targeted online promotions and individual pizzas, while earnings per share rose and the company continued opening stores across its international network.
Economics & Markets··Midday
Comparable sales growth loses pace
Domino’s, the pizza restaurant chain, reported US same-store sales growth of 0.3 per cent for the third quarter, against 5.2 per cent a year earlier. This measure compares sales at existing locations. The October 13 results covered the fiscal quarter ending September 6.[1], [2]
Chief financial officer Sandeep Reddy said more orders in core channels and continued aggregator growth were partly offset by lower average purchases. He linked fewer items per order in carryout and company-run delivery to difficult consumer conditions. Average-ticket trends had improved from the second quarter, although the number of items bought per transaction fell sequentially in those two channels. International comparable sales rose 0.2 per cent, compared with 1.7 per cent a year earlier.[1]
Jordan targets individual meals and promotions
Chief executive Joe Jordan outlined targeted website promotions intended to encourage larger orders. He also described the Domino, an individual pizza, as a way for people sharing a meal to make their own choices. He said it could reach customers seeking a meal for themselves on ordering platforms. Jordan took over as chief executive on October 1 after serving as chief operating officer and president of the US business; Russell Weiner moved into a transition toward executive chairman.[1]
Earnings rise as the store network expands
Revenue increased 3.4 per cent to 1.19 billion dollars, and diluted earnings per share rose 12.7 per cent to 4.60 dollars from 4.08 dollars. The food basket charged to US franchisees became 2.2 per cent more expensive. Supply-chain gross margin reached 12.2 per cent after a 0.9-point increase, which the company attributed to procurement productivity. Operating income reached 241.8 million dollars, up 8.3 per cent.[2]
Domino’s added a net 175 stores worldwide, including 149 outside the United States, taking the total to 22,706. Quarterly share buybacks cost 73.6 million dollars. Across the first three fiscal quarters, free cash flow declined to 459.8 million dollars from 495.6 million dollars. The company primarily attributed the decrease to advertising-payment timing and working-capital movements, while Jordan set out improved franchisee profitability as a management objective.[2]
