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Author: Alan LittleDate: 2021-10-15

Domino’s (DPZ) -0.16% after US sales fall for first time since 2011

Domino’s (DPZ) posted a mixed Q3 report with an earnings beat and revenue miss on Thursday, though most of the focus was on its surprise US sales decline.

Domino’s Pizza (DPZ) shares were lukewarm on Thursday after the restaurant company delivered a mixed Q3 report that showed a decline in US sales for the first time in a decade and a revenue miss.

Michigan-based Domino’s thrived in its domestic market during the pandemic as more consumers bought takeaway meals, but that trend appears to have come to an abrupt end after sales fell 1.9% in Q3.

Investors will also be concerned about revenue growth, which was just +3% this time around, while the overall $998m figure came up short of the $1.03bn Wall Street consensus.

There was good news in the form of an earnings beat as a $120.4m profit or $3.24 per share earnings comfortably surpassed the $3.11 expectations.

While same-store sales were down stateside, international comparable sales fared better, rising 8.8% to edge out the 8% consensus.

Domino’s chief executive Ritch Allison pointed out in a statement that sales in the US had jumped 15.6% from 2019 levels, with international sales climbing 15% over the same period.

A stagnation in overall sales growth will be a sticking point, but Allison revealed that “a very challenging staffing environment” had put additional pressure on trading.

He also warned that further issues with COVID-19 and “inflationary headwinds” will continue to impact Domino’s during the months ahead.

While there are worries for investors, Morningstar analyst Sean Dunlop believes that Domino’s still has a competitive advantage due to its “best-in-class e-commerce interface” and its strength in “‘anyware’ ordering”.

Domino’s shares were bouncing in and out of negative territory on Thursday with a sharp late morning rally followed by a mid-afternoon decline.

By around 3pm in New York, DPZ was down 0.16% at $475.90.

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