Domino’s Pizza
reported better-than-expected earnings for the fourth quarter as it seeks to keep growing despite inflationary pressures.
The company posted revenue of $1.403 billion, up 0.8% from a year ago but slightly below the $1.422 billion forecast from Wall Street analysts. Earnings per share were $4.48, up 5 cents, or 1.1%, from the year-ago period and better than analysts’ expectations of $4.38.
Gross margin for Domino’s company-owned stores in the U.S. decreased 1.6 percentage points from a year ago, primarily due to higher costs of labor and insurance as well as the relaunch of its rewards program, according to the company.
The pressures were partially offset by higher U.S. same-store sales, which grew by 2.8% from a year ago. But overseas same-store sales were largely flat. The company opened more than 300 new overseas locations in the fourth quarter, compared with fewer than 100 new stores in the U.S.
Excluding the impact from foreign currency, the pizza chain’s global sales increased 4.9% from a year ago to reach $5.7 billion. Sales were split half and half between its domestic and international segments, which also grew at a similar pace over the past year.
At its Investor Day in December, Domino’s announced a growth plan that aims to open 1,100 new stores through 2028 and increase retail sales by 7% every year. The pizza chain also began working with
Uber Eats
last year to reach wealthier households and improve sales in the delivery channel.
The strong fourth-quarter numbers demonstrate that the company’s growth strategy is already delivering results, management said.
“Domino’s foundation has never been stronger, ” said CEO Russell Weiner. “These results give us confidence in our brand and the company’s ability to win and create meaningful value for our shareholders.”
In the U.S., Domino’s had more new franchisees in 2023 than it did in the past 15 years, management said during the earnings call. And international net openings are expected to pick up this year after the company finishes planned closures in Russia and Brazil.
Domino’s also plans to provide more value to customers through promotion campaigns, as well as engage lower-frequency and carryout users through its new loyalty program, Domino’s Rewards, launched in September.
Domino’s Rewards has already added 3 million new members—in part because of marketing campaigns such as “Emergency Pizza,” which allows only Rewards members to order a free pizza in emergency situations such as burned dinners and Wi-Fi outages.
“Once you sign up for the programs, we’re in this flywheel of frequency-driving point levels that we’ve never had before,” said CEO Russell Weiner on the earnings call.
The program has worked “extremely well” for company-operated stores, and some lower-tier promotions are more profitable for franchisees, the company said. Management expects the program to significantly drive profit dollars and expand margins this year.
“There’s a number of different promotions that we can continue to bring along onto Domino’s rewards,” said CFO Sandeep Reddy. “Rather than looking at Emergency Pizza by itself, it’s really Domino’s Rewards. This is a significant pillar of how we’re going to drive transaction growth in 2024 for both in delivery as well as carryout.”
Domino’s board of directors approved a 25% increase in quarterly dividend to $1.51 a share and authorized additional share repurchases of up to $1 billion besides the $141.3 million remaining from previous repurchase programs.
The stock was up 6% on Monday. Heading into the trading session, shares had gained 47% over the past 12 months.
Write to Evie Liu at [email protected]
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