FRIDAY, March 29, 2024
nationthailand

Domino's jumps 29%, most on record, on sustained sales growth

Domino's jumps 29%, most on record, on sustained sales growth

Domino's Pizza jumped the most on record after reporting U.S. sales growth that outpaced expectations in the latest quarter -- a sign the pizza chain's ongoing investment in delivery and carryout is paying off.

U.S. same-store sales climbed 3.4% in the fourth quarter that ended Dec. 29, the company said Thursday, topping analysts' average estimate for 2.1% growth, according to Consensus Metrix. Domino's also reported profit and revenue that beat estimates, and its operating margin expanded from a year earlier.

Growth in the U.S. restaurant industry doesn't come easy these days, and Domino's already has 6,000 locations in a market that's overly saturated. Still, Domino's has been quickly expanding -- pouncing on the so-called fortressing strategy -- to offer easier carryout and faster delivery than rivals. It added a net 141 units last quarter in the U.S.

The report may be giving investors confidence in the company's ability to recapture same-stores sales growth and market-share gains, MKM Partners analyst Brett Levy said in a research note.

On a call with analysts, company executives said that the results were bolstered by its popular carryout options and new locations. The company cited increasing competition with delivery specialists like Uber Eats and GrubHub, however.

Excluding some items, profit was $3.13 a share last quarter, compared with estimates for $2.98. Still, the company is facing some pressure from higher food and labor costs.

Like other restaurant companies with exposure to China, the chain may see an impact from the coronavirus outbreak there. It said last month that its franchisee in China is taking extra precautions. While Domino's has just 274 locations there now, it has named the market as one of its key growth areas. Domino's international same-store sales rose 1.7%, short of the 2% growth analysts had projected.

The stock rose as much as 29% to $381.86 -- the most since the company went public in 2004 and a record high. The company has posted annual stock gains for 11 straight years headed into 2020.

 

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