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Target rattles Wall Street with weak quarter, outlook

Associated Press

Minneapolis — Domino’s sales jumped 12.2 percent at established U.S. locations in the final three months of 2016, extending the pizza delivery chain’s streak of growth as it focuses on convenience and affordable prices.

The Ann Arbor, Michigan company has pushed up the sales figure up for nearly six straight years, in part by offering easier ways to order online, on mobile phones and social media. Domino’s says 60 percent of U.S. sales now come through digital ordering. In the fourth quarter, it said the sales growth came from an increase in orders, while the average amount people spent per order fell slightly, underscoring that the chain’s prices may also be attracting customers.

Domino’s delivery model fits with the shifting restaurant industry, with several fast-food chains just starting to look at options like delivery and online ordering to cater to those with less patience for waiting in lines at stores. Rival Pizza Hut, which saw its U.S. sales fall 4 percent in the fourth quarter, has partly blamed its image as a sit-down, red-roofed restaurant for its slumping sales.

Jeffrey Lawrence, chief financial officer for Domino’s, also noted Tuesday that the company was in the favorable segment of the pizza business — carry-out and delivery.

“We’re glad we’re not in the dine-in business,” Lawrence said during a conference call with analysts.

Domino’s CEO Patrick Doyle has also said that national pizza chains are positioned to take market share from smaller regional players in the pizza industry, which is more fragmented than the burger industry. The company notes that it has the scale to invest in digital ordering platforms and affordable prices in a way that local pizzerias may not be able to.

For all of 2016, Domino’s said sales rose 10.5 percent at stores open at least a year, a key measure of financial health. That follows a 12 percent increase in 2015 and a 7.5 percent increase in 2014. It also expanded its store base to 13,800 globally, with more than 5,370 of them in the U.S.

Maxim Group analyst Stephen Anderson noted that Papa John’s, which reported a 3.7 sales increase for the fourth quarter, recently said its results were pinched by weaker TV ratings for NFL games. That didn’t appear to be a factor for Domino’s however, with Doyle saying that “our Sundays continue to be strong.”

Overseas, Domino’s said international sales rose 4.3 percent at established locations for the quarter.

For the three months ended Jan. 1, Domino’s earned $72.7 million, or $1.48 per share. That was more than the $1.43 per share analysts surveyed by Zacks Investment Research expected.

Total revenue for the quarter was $819.4 million in the period, also beating Street forecasts.

Shares of Domino’s Pizza Inc., which have risen 16 percent since the beginning of the year, rose more than 1 percent before the opening bell Tuesday.