Domino's Pizza beats profit forecasts due to strong takeout and delivery orders


Domino's Pizza announced its first-quarter financial results Monday morning, with both sales and bottom line profits exceeding Wall Street expectations.

Shares rose 5.2% to $525 in pre-market trading.

The company said its earnings for the first three months of 2024 rose 22% from a year earlier to $3.58 per share, well above the $3.40 expected by analysts surveyed by FactSet. Total revenue was $1.08 billion, up 6% year over year and slightly above street expectations.

“Our first quarter results showed that our Hungry for More strategy is off to a strong start with more sales, more stores and more profits.” CEO Russell Weiner said in a statement, referring to the company's five-year growth plan announced in February 2016. December. The plan, dubbed “Hungry for More,” aims to open an additional 1,100 stores by 2028, increase retail sales by 7% annually, and increase operating profit by 8% annually.

The pizza chain has more than 20,000 restaurants around the world, most of which are operated by franchisees who pay royalties and fees. Global sales across the Domino's Pizza network totaled $4.36 billion in the first quarter, representing a year-over-year growth of 7.3%, excluding the impact of currency fluctuations.

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Same-restaurant sales increased 5.6% at U.S. stores, significantly outpacing the 1% growth at overseas stores. Wiener said the U.S. growth was primarily driven by an increase in takeout and delivery orders across all income groups. In the first quarter, Domino's Pizza opened 164 new restaurants, all but 20 of which are overseas.

“We are focused on driving franchisee profitability and store growth, which will enhance the company's ability to win and create meaningful long-term value for our shareholders,” Wiener said. said in a statement on Monday.

Domino's Pizza began working with Uber Eats in 2023 as part of an effort to reach affluent households and increase sales in the delivery channel. The company started marketing on the platform in the first quarter of this year. Management expects Uber's sales to start increasing and reach 3% of total sales by the end of the year.

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Domino's also relaunched its loyalty program, Domino's Rewards, in September to better engage infrequent customers. By the end of 2023, the program will have 33 million active members, more than 2 million of whom joined after its September renewal.

The company has previously said that its emergency pizza promotion, which allows Rewards members to order free pizza in emergency situations like a burnt dinner or Wi-Fi outage, is a big driver of new member acquisition.

“Domino's Rewards will continue to offer a variety of promotions,” Chief Financial Officer Sandeep Reddy said during Domino's fourth-quarter earnings call in February. “This is a key pillar of how we drive trade growth in 2024, both for delivery and takeaway.”

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In another effort to encourage repeat orders, Domino's Pizza announced last week that customers who tip their delivery workers will be reimbursed with a $3 coupon to use on their next week's online delivery order. The company has run similar promotions for takeout orders in the past.

In the first quarter of 2024, Domino's Pizza repurchased $25 million worth of stock, returning capital to investors. The company also announced a quarterly dividend of $1.51 per share, to be paid on June 28th.

Email Evie Liu at evie.liu@barrons.com.



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