July 19, 2018 / 3:35 PM / 5 months ago

Domino's international same-store sales fail to deliver, shares slip

(Reuters) - Domino’s Pizza Inc (DPZ.N) missed analysts’ estimates for international same-store sales growth on Thursday, prompting concerns of slowing growth at the business and pushing shares down 3 percent in morning trading.

FILE PHOTO: A Domino's Pizza restaurant is seen in Los Angeles, California, U.S. July 18, 2018. REUTERS/Lucy Nicholson

Comparable store sales in the restaurant chain’s international business rose 4 percent, but fell short of estimates of a 5.1 percent increase, according to Thomson Reuters I/B/E/S.

“Our international unit growth has admittedly been a bit slower than our historic norms during the front half of 2018,” Richard Allison said on his first post-earnings call as chief executive officer, but stressed that the business would normalize on a full-year basis.

Domino’s international business is wholly run by franchisees and the company gets a sizable chunk of revenue from ingredients and equipment it supplies them. Overall, supply chain revenue rose 13 percent in the second quarter.

Allison in July succeed company veteran Patrick Doyle, who during his eight-year tenure helped turn around the company by improving the ingredients and taste of its pizza and investing in technology to simplify the food ordering process.

These have helped the restaurant chain post better results than rivals such as Yum Brands’ (YUM.N) Pizza Hut and Papa John’s International Inc (PZZA.O).

“We’ve had success gaining share ... a lot of that has come from the locals and the regionals,” Allison said.

Same-store sales at its outlets in the United States rose 6.9 percent, just ahead of Wall Street estimates of a 6.82 percent increase.

The company operates 5,692 stores, both company owned and franchises, in the United States and 9,430 outlets in international markets.

The narrow beat comes as national pizza chains’ dominance of the U.S. restaurant market is being challenged by the rise of restaurant delivery companies GrubHub Inc (GRUB.N), UberEats and DoorDash, analysts have said.

Excluding one-time items, Domino’s earned $1.84 per share, beating analysts’ average estimate of $1.75.

“(The second quarter) reinforces the view that (ex-tax) EPS upside will be more limited,” Bernstein analyst Sara Senatore said.

Net income rose to $77.4 million in the second-quarter ended June 17, from $65.7 million a year earlier.

Total revenue rose about 24 percent to $779.40 million, but missed analysts’ average estimate of $784.61 million.

The company’s shares were down 2.8 percent at $275.85 in late morning trade. They have gained 50 percent since the start of the year.

Reporting by Aishwarya Venugopal in Bengaluru; editing by Sriraj Kalluvila

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