Dismal Supply-Chain Sales Hurt Domino's (DPZ) Q3 Results
Domino's Pizza, Inc. DPZ third-quarter fiscal 2023 top line was hurt by dismal supply chain and U.S. company-owned stores revenues. However, the company’s top line increased year over year, driven by unrealized gain related to the remeasurement of DPZ’s investment in DPC Dash as well as favorable tax impact.
DPZ reported third-quarter fiscal 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same.
Dismal Supply-Chain Revenues Continue to Hurt
Revenues of $1,027.4 million missed the consensus mark of $1,052 million and dipped 3.9% on a year-over-year basis. The downside can be attributed to lower revenues from the supply chain and U.S. company-owned stores.
In third-quarter fiscal 2023, supply-chain revenues came in at $618.1 million, down 4.3% year over year. Our model predicted supply chain revenues to decline 3.3% year over year. This bleak performance was mainly caused by a decline in market basket pricing to stores and reduced order volumes. In the third quarter of 2023, DPZ experienced a 1.7% decrease in market basket pricing to stores compared with third-quarter fiscal 2022 levels.
On the other hand, U.S. company-owned stores revenues came in at $86.3 million, down 23.2% year over year, owing to refranchising of 114 U.S. company-owned stores in Arizona and Utah.
Domino's Pizza Inc Price, Consensus and EPS Surprise
Domino's Pizza Inc price-consensus-eps-surprise-chart | Domino's Pizza Inc Quote
Outlook
Considering the actual results for the first three fiscal quarters of 2023 and the company's projections for the remaining period, management anticipates that 2023 global net store growth will align with or slightly fall below the lower end of 5-7% two to three-year outlook band. Furthermore, DPZ foresees its 2023 global retail sales growth, excluding foreign currency impact, to trend slightly below the midpoint of its two to three-year outlook range of 4-8%.
Zacks Rank & Key Picks
Domino's currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail – Restaurants industry are:
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The Zacks Consensus Estimate for ANF’s 2023 sales and EPS implies increases of 10% and 1,644%, respectively, from year-ago levels.
Arcos Dorados Holdings Inc. ARCO currently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 35%, on average. The stock has gained 28.7% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2023 sales and EPS suggests rises of 19.2% and 13%, respectively, from year-ago numbers.
Yum! Brands, Inc. YUM carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 2%, on average. Shares of YUM have improved 6% in the past year.
The Zacks Consensus Estimate for YUM’s 2023 sales and EPS indicates growth of 5.9% and 15.1%, respectively, from year-ago figures.
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