Domino's Pizza shares tank as Q2 sales underwhelm

Shares in Domino's Pizza tanked in pre-market trading on Thursday after the American takeaway pizza chain missed the mark with its quarterly sales figures and suspended its targets for store openings.

The company reported a 7.2% increase in global retail sales to $4.43bn in the second quarter – that's those coming from both franchised and owned stores – with US store sales rising 6.8% to $2.22bn and international sales gaining 7.7% to $2.21bn.

Total revenues came in at $1.10bn, up 7% on the previous year but slightly below what the market was expecting.

Underlying growth also disappointed analysts, with US same-store sales rising by just 4.8%, lower than the 4.91% consensus forecast and the 5.6% growth registered in the first quarter.

Income from operations rose by just 0.4% year-on-year to $196.1m in the second quarter, with diluted earnings per share rising 31% to $4.03. This was well ahead of forecasts but mainly due to a $26.4m pre-tax unrealised gain associated with its investment in Chinese master franchisee DPC Dash.

Meanwhile, the company scaled back its projections for international stores growth, expecting them to fall 175 to 275 stores below the 2024 goal of 925+ net stores, mainly as a result of closures at its Australia-based master franchisee, Domino's Pizza Enterprises (DPE), the group's largest franchisee which controls its network across much of Asia Pacific and Europe.

While the US store openings outlook remains unchanged at 175+ net annually for 2024 to 2028, Domino's said it was temporarily suspending its guidance metric of 1,100+ global net stores until uncertainties at DPE are ironed out.

Futures were showing a 11.7% drop in the share price ahead of the opening bell on Wall Street, trading at just $417.94 by 0728 in New York, down from Wednesday's close of $489.85.