Domino's Pizza Inc. DPZ released its first-quarter results on April 23 before the market opened.
The Ann Arbor, Michigan-based restaurant chain recorded stronger-than-expected earnings and revenue, citing positive comps growth in the U.S. as well as higher royalty revenue from U.S. and international franchised stores.
Key metrics
The pizza chain posted earnings of $3.07 per share for the quarter, which jumped 19% from the prior-year quarter and also surpassed Wall Street’s estimates of $2.32. Revenue grew 4.4% to $873.1 million, which was above analysts' expectations of $868.7 million.
At the end of the quarter, the company had unrestricted cash and cash equivalents of $200.8 million and total debt (less current maturities) of $4.06 billion.
Domino’s CEO Ritch Allison said the following:
"In a time of unprecedented change in our industry, I am pleased to report that Domino's is in a very strong financial position, both at the brand and franchisee levels. We can't predict the full impact of COVID-19 on the broader economy and we don't know how consumer behavior and restaurant purchasing patterns may evolve coming out of this crisis.”
Comparable store sales
Despite stiff competition from third-party delivery services like DoorDash and UberEats, Domino’s managed to eke out same-store sales growth of 1.6% in the U.S., including company-owned and franchise stores. Worldwide comps, barring foreign currency translation, inched up 1.7%.
The first quarter marked the 36th straight quarter of positive domestic same-store sales growth and the 105th quarter of consecutive international comps growth.
Store count
In the first quarter, the company opened 69 net new stores, of which net 30 were in the U.S. and 39 were net new international locations.
Fortressing strategy
Domino’s has been implementing a strategy called "fortressing" during the pandemic. Under this strategy, the company attempts to ensure that a domino’s outlet is available in the vicinity of every potential customer. This strategy would ensure faster deliveries, given the fact that the company has a robust logistics network. In February, the company said that rival pizza delivery companies are cutting down on incentives in an effort to increase profit. Because of this, the customers are more likely to stop ordering from them.
Guidance
The company has not provided guidance, citing the global uncertainty caused by the pandemic.
Disclosure: I do not hold any positions in the stocks mentioned.
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