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Domino's Pizza domestic same-store sales disappoint

Heidi Chung
FILE PHOTO: A pizza comes out of the oven at Domino’s Pizza restaurant in Los Angeles, California, U.S. July 18, 2018. REUTERS/Lucy Nicholson/File Photo

Domino’s Pizza shares sank 5% after the pizza giant reported third-quarter financial results. Sales grew across the board; however, some same-store sales figures were lighter than expected.

Domestic same-store sales in the U.S. grew by 6.3% and were shy of Wall Street’s expectations of 6.4%.

International same-store sales were above analyst forecasts at 3.3% versus the 3.2% forecasted.

Revenue came in lower than analyst expectations at $786 million versus an expected $791 million.

“Our global business, driven by strong retail sales growth and franchisee economics that outperformed the industry, continued its strong momentum,” CEO Ritch Allison said in a statement.

The pizza giant reported earnings of $1.95 per share in the third quarter, which was above Wall Street’s expectations at $1.75 per share.

Eye on the competition

Analysts and investors were paying close attention to the possible margin benefits that Domino’s might have seen from the controversy entangling competitor Papa John’s.

“We think investors were looking for signs of an acceleration in same-restaurant sales amid recent woes at [Papa John’s] … [Domino’s] comps did not accelerate in the face of peer Papa John’s woes,” analyst Stephen Anderson of Maxim Group said in a research note on Tuesday.

Furthermore, when Morgan Stanley analyst John Glass asked on the earnings conference call about Papa John’s, CEO Ritch Allison said, “That specific competitor has a relatively small share within the category. When we take a look at the category overall, we’re more focused on our own competitive strategy than we are on the short term ups and downs of any specific competitor.”

Another big area of focus was the performance of “Hotspots.” Domino’s launched the new initiative in April which allows customers to order delivery to places other than homes and businesses, including stadiums, beaches, parks and more.

Hotspots has been a really fun program for us … with our goal of making Domino’s pizza accessible to our customers anytime and anywhere they want it. What I’ve been really impressed by is the terrific brand engagement,” Allison said.

Domino’s shares were trading in the $259.37 range midday Tuesday.