An employee places a pizza box onto a shelf at a Domino’s Pizza Inc. restaurant in Chantilly, Virginia.
Andrew Harrer | Bloomberg | Getty Images
Domino’s Pizza on Thursday said U.S. same-store sales continued to grow a month into its second quarter, even as the coronavirus pandemic roils the restaurant industry.
The company’s U.S. same-store sales grew 7.1% from March 23 to April 19.
However, the pizza chain withdrew its two- to three-year outlook, citing the uncertainty surrounding the economy and Domino’s operations due to the pandemic. Domino’s previously forecast U.S. same-store sales growth in a range of 2% and 5% and global sales growth of 7% to 10%.
“I remain very optimistic about the long-term growth and success of our brand,” CEO Ritch Allison said on the conference call.
Shares of the company fell more than 5% in morning trading.
Domino’s comments came as the company reported fiscal first-quarter sales growth of 4.4%. Stay-at-home orders and social-distancing measures have upended the restaurant industry, but Domino’s reputation for delivery has protected it from steep sales declines. As millions of restaurant workers lose their jobs, the company is hiring 10,000 employees in the United States to meet demand for its pizza.
Here’s what the company reported for the quarter ended March 22:
- Earnings per share: $3.07
- Revenue: $873.1 million
The pizza chain reported fiscal first-quarter net income rose to $121.6 million, or $3.07 per share, from $92.6 million, or $2.20 per share, a year earlier.
Net sales increased 4.4% to $873.1 million. U.S. same-store sales rose 1.6%, and international same-store sales grew 1.5%.
Wall Street anticipated earnings per share of $2.32 on revenue of $868.7 million, based on a survey of analysts by Refinitiv. However, it’s difficult to compare reported earnings to analyst estimates for Domino’s quarter, as the coronavirus pandemic continues to hit global economies and makes earnings impact difficult to assess.
Domino’s announced preliminary results for its same-store sales growth and revenue growth on March 30.
Likewise, the company shared sales results for the first four weeks of Domino’s second quarter. U.S. sales for the pizza chain jumped 10.7% from March 23 to April 19, compared to a year ago. Sales at locations open at least a year rose 7.1%.
CFO Jeff Lawrence said that domestic weekday sales are up significantly, but weekend and late-night sales are under pressure. Allison said that consumers are growing tired of cooking and have exhausted their pantry loading. Stimulus checks could also be lifting sales.
“It is early in this crisis,” Lawrence said. “We just don’t know how consumer behavior will ebb and flow.”
The company’s international locations are faring worse. In the first three weeks of the second quarter, same-store sales declined 3.2%, excluding restaurants that have temporarily shuttered. While nearly all of Domino’s U.S. restaurants are open, about 1,750 of its international locations have temporarily closed, as of April 21. The company estimates that those closures will mean a $5 million hit to earnings during the second quarter.
Allison said that sales in China, the first market to be hit by Covid-19, have recovered and are beginning to accelerate in recent weeks.
Domino’s has $200.8 million in cash and cash equivalents on hand, as of Wednesday. The company is still paying a 78-cent quarterly dividend to investors but has not bought back any stock since January.
Domino’s has not provided wide-scale financial relief to its global franchisees. Executives estimate that giving out bonuses to hourly workers, providing masks and gloves and donating 10 million slices of pizza will hit second-quarter profits by $15 million.