- Domino's reported 3.5% same-store sales growth in the United States for its second quarter, even as it faced tough comparisons to last year's skyrocketing pizza demand.
- On a two-year basis, U.S. same-store sales climbed 19.6% during the quarter.
- CEO Ritch Allison said that the company will hike wages for workers at company-owned restaurants in certain markets and positions.
Domino's Pizza on Thursday reported that its U.S. same-store sales climbed 3.5% in its latest quarter, despite tough comparisons to its skyrocketing sales during lockdowns last year.
Shares of the company rose more than 11% in morning trading.
Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
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- Earnings per share: $3.12 adjusted vs. $2.87 expected
- Revenue: $1.03 billion vs. $972.3 million expected
The pizza chain reported fiscal second-quarter net income of $116.6 million, or $3.06 per share, down from $118.7 million, or $2.99 per share, a year earlier.
Excluding recapitalization expenses, Domino's earned $3.12 per share, beating the $2.87 per share expected by analysts surveyed by Refinitiv.
Net sales rose 12.2% to $1.03 billion, beating expectations of $972.3 million.
In the U.S., Domino's reported positive same-store sales growth. On a two-year basis, U.S. same-store sales rose 19.6% in the quarter. Executives said that customers were spending more money on their orders, fueled by purchases with more food items, a "modest" menu price hike and a higher delivery fee. The segment's strong performance this quarter is a sign that the company may be able to avoid a sales slump stemming from pizza fatigue.
"You've often asked if our sales growth might be weaker in markets that have more fully reopened, but to the contrary, the opposite trend emerged through the second quarter, where we saw higher levels of sales growth in the second quarter in the markets with fewer Covid-related restrictions," CEO Ritch Allison told analysts.
He also said that Domino's, along with other large pizza chains, is taking market share from independent pizzerias.
One challenge for Domino's this quarter was labor. Allison said that the margins for corporate-owned locations were higher this quarter than the company wanted because of the struggle to find willing workers. The company is planning to implement higher wages across some corporate-owned markets and for certain positions in the second half of the year.
Allison said that staffing is a major hurdle to opening more new restaurants. Additionally, Domino's is still seeing construction and permitting delays tied to the pandemic, as well equipment shortages because of supply chain interruptions. Worldwide, the company added 238 net new locations during the quarter, including 35 in its home market.
Outside of the U.S., Domino's same-store sales jumped 13.9% compared with a year ago and 15.2% compared with two years ago. Last year, Domino's international business was hurt by temporary restaurant closures in markets with stricter lockdowns than the U.S.
Additionally, Domino's announced that it completed a $1.85 billion recapitalization transaction, which was previously announced. The company also made a $1 billion accelerated share repurchase agreement with an unnamed party, allowing the company to receive and retire more than 2.25 million shares.