Domino's Pizza ($DPZ), a leading player in the global pizza industry, showcased impressive financial results for the second quarter, indicating robust performance despite a temporary pause on its long-term outlook for worldwide net store growth. During the three-month period ending June 16, the company reported earnings of $4.03 per share, a significant increase from $3.08 per share in the same quarter the previous year.
This impressive performance surpassed analysts' expectations, with a consensus estimate on Capital IQ predicting an EPS of $3.68. Revenue for the quarter surged 7.1%, reaching nearly $1.1 billion, aligning closely with market expectations. The growth in revenue was largely attributed to increased earnings from franchise royalties and advertising in the United States, alongside a positive contribution from the supply chain sector.
The company attributed the enhanced supply chain revenue to higher order volumes and a slight (0.7%) uptick in the food basket pricing for stores. In terms of same-store sales, Domino's experienced a notable advancement of 4.8% year over year in the U.S. Moreover, its international operations, when adjusted for foreign exchange impacts, exhibited a growth rate of 2.1%.
Russell Weiner, the Chief Executive, remarked positively on the second consecutive quarter of healthy U.S. comparable sales performance, stating, "We drove U.S. performance in the healthiest way possible, through profitable order count growth." He further emphasized that the company had successfully increased order counts across delivery, carryout, and all income demographics. On a global scale, Domino's achieved a net growth of 175 stores within the quarter, with 32 new openings in the United States and 143 internationally.
When considering the exclusion of foreign currency impacts, the company noted that global retail sales experienced a 7.2% year-over-year increase. However, the company announced a temporary suspension of its previous guidance which aimed for over 1,100 net new global stores annually from 2024 to 2028.
This decision is primarily due to uncertainties surrounding the impact of store openings and closures led by Domino's Pizza Enterprises, one of its master franchisees. Notably, this franchisee disclosed plans to close select stores in Japan and France. Following the earnings announcement, Domino's stock plummeted by 10% during Thursday's trade.
Looking forward, the company is now targeting a global net store growth outlook for 2024 of between 825 to 925 units and has revised its international net-store growth target for 2024 downward by 175 to 275 units, with an expectation of achieving over 175 net openings each year in the U.S. from 2024 to 2028.
Despite the challenges, the pizza chain remains optimistic about future growth, maintaining forecasts of over 7% growth in annual global retail sales and over 8% growth in annual income from operations for the period of 2024-2028..