Why Domino's Pizza Shares Are Sliding Today

Domino's Pizza Inc DPZ reported a third-quarter FY23 sales decline of 3.9% year-on-year to $1.03 billion, missing the analyst consensus of $1.05 billion.

The revenue decrease was primarily due to lower supply chain and U.S. Company-owned store revenues. The decline in supply chain revenues was attributable to reduced market basket pricing to stores and lower order volumes.

Global retail sales increased 4.9%, excluding the positive impact of foreign currency. Excluding foreign currency impact and closure of the Russian market, global retail sales grew 5.1%.

Without adjusting for the impact of foreign currency, but excluding the closure of the Russian market, global retail sales grew 5.3%.

Same-store sales in the U.S. declined 0.6%, while International same-store sales (excluding foreign currency impact) increased 3.3%.

The company had a global net store decrease of 8 stores, comprising 27 net U.S. store openings and 35 net international store closures. 

Gross margin for the quarter expanded 310 basis points to 38.8%. Operating margin for the quarter expanded 190 basis points to 18.4%.

EPS of $4.18 beat the analyst consensus estimate of $3.30.

Operating cash flow for the nine months totaled $422.1 million, with a free cash flow of $362.9 million.

On October 10, 2023, the company's Board of Directors declared a $1.21 per share quarterly dividend on its shares of record as of December 15, 2023, to be paid on December 29, 2023.

In Q3, the company repurchased and retired 229,860 shares of common stock for a total of $90 million. As of September 10, it had a total remaining authorized amount for share repurchases of $199.5 million.

Outlook: Domino's sees FY23 global net store growth to trend at or slightly below the low-end of its 5% to 7% two- to three-year outlook.

DPZ expects FY23 global retail sales growth, excluding foreign currency impact, to trend modestly below the mid-point of its 4% to 8% two -to three-year outlook.

Price Action: DPZ shares are trading lower by 2.27% at $346.00 in premarket on the last check Thursday.