The increase is largely driven by higher market basket pricing to stores, which increased 15.2% YoY as inflation continues to take hold. Total revenue for the quarter was $1.06 billion, up 3.2% YoY (year over year) from $1.03 billion. We continued to navigate a difficult labor market, especially for delivery drivers, in addition to inflationary pressures combined with COVID and stimulus-fueled sales comps from the prior two years in the U.S. Our results for the quarter faced challenges consistent to those I outlined back in April. Russell Weiner, CEO, on second-quarter results: The drop is offset by the growth in store count, as the company opened 233 new stores globally during the quarter. US same-store sales declined 2.9% while international same-store sales declined 2.2%. The company reported global retail sales growth of 1.5%, compared to the growth of 17.1% in the prior year. The growth rate continues to slow while the bottom line deteriorated significantly. Therefore I rate Domino's as a sell at the current price.ĭomino's reported its second-quarter earnings back in July and the results are very disappointing. The current valuation is also very stretched compared to peers, signaling potential multiples contraction. It is facing strong headwinds from inflation, supply chain, and negative currency impact. The company's sales growth has slowed significantly and EPS declined, as shown in the latest earnings. Despite the large drop, I believe investors shouldn't hop in right away. Amid the broad market sell-off, Domino's had been slumping and is now down almost 35% from its all-time high last year. The company's shares were up over 970% during the period, compared to just 176% from the S&P. These factors combined made Domino's one of the most popular pizza brands in the world.ĭomino's has been one of the best compounders in the past decade. Over 75% of its sales are made via digital channels, with over 29 million active users globally. It also operates with a digital-first approach. With lower costs, it is then able to offer attractively priced pizzas, significantly outpricing its competitors. This allows the company to be more agile and have smaller stores, lowering costs and expenses. Currently, 57% of sales are from delivery while 43% are from carryout.
Unlike most pizza chains, Domino's doesn't provide in-house dining. The company's differentiated operating model saw wide success in recent years, substantially outperforming peers such as Pizza Hut and Papa John's. EyeOfPaul/iStock Editorial via Getty Images Investment Thesisĭomino's ( NYSE: DPZ) was founded back in 1960 by Tom Monaghan.
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