Domino’s Pizza Inc. (DPZ.N) plunged the most intraday since 2017 in U.S. trading on Thursday after fourth-quarter results showed the company’s rapid growth of recent years is starting to taper off.
-Same-store sales -- a key gauge of whether a chain’s strategy is succeeding -- rose 5.6 per cent in the period. That’s below of the average estimate of 7.2 per cent from analysts, according to Consensus Metrix.
-The company fell short in the measure at the international and domestic levels as well.
Key Insights
-Same-store sales, while still higher than the industry average, are slowing down -- and that’s likely sparking investor concern. The company has used new tools like delivery to any location to spark sales growth, but the effects of these measures may be starting to fade.
-At the same time, the chain is on an expansion tear, with Chief Executive Officer Richard Allison saying last month that it aims to become the world’s dominant pizza player by 2025 with 25,000 stores. Domino’s said Thursday it opened 1,058 stores last year, with more than half the total coming in the fourth quarter.
-The company is pushing growth abroad: About three-quarters of the stores opened in 2018 are outside the U.S. But currency swings took a toll on revenue last quarter, with currency trimming the annual growth rate by three percentage points.
Market Reaction
-Domino’s shares fell as much as 7.7 per cent to US$257.02 -- the biggest intraday decline since July 2017.
Advertisement