Shares of Domino’s Pizza (DPZ) are down 12% after the restaurant chain reported second-quarter sales that missed Wall Street targets.
For the quarter ended June 30, Domino’s posted earnings per share (EPS) of $4.03 U.S., which was ahead of the $3.68 U.S. forecast among analysts. The company’s profit rose 30% from a year earlier.
However, revenue of $1.1 billion U.S. was slightly below Wall Street’s expectations, sending Domino’s stock sharply lower.
Also, the 30% earnings growth was due to a change in pretax unrealized gains and losses associated with the company’s investment in DPC Dash, its exclusive franchisee in China.
Domino’s owns more than 20,000 restaurants around the world and they are largely run by franchisees who pay the company royalties and fees.
Across the network, sales totaled $4.43 billion U.S. in Q2, up 7.2% from a year ago. Same-restaurant sales grew 4.8% at U.S. stores and 2.1% at international locations.
The company is in the midst of an aggressive five-year growth strategy that includes plans to open 1,100 new stores through 2028 and boost annual sales by an average of 7%.
Last year, Domino’s began listing its food on UberEats to bolster its delivery sales. The company also relaunched its loyalty rewards program.
In Q2 of this year, Domino’s opened 228 new restaurants, mostly in international markets, and closed 53 locations.
Still, the company warned of challenges to its plan.
Domino’s had wanted to open 925 net new restaurant locations this year but said that number could be revised down by 275 outlets due to challenges faced by some franchisees.
Prior to today (July 18), the stock of Domino’s Pizza had risen 20% over the last 12 months and was trading at $473.27 U.S. per share.
