Domino’s Pizza Inc. (NYSE: DPZ) is looking more and more troubled. The company has given a poor earnings report and it is facing much more important top-line issues. This is showing up in franchise-owned stores and its company-owned stores. So what happened on its earnings?
The company said that excluding a gain on the sale of company-ownedstores and income-tax benefits, it earned $0.13. First Call estimates were for $0.21. But here is the kicker: revenue were down4.1% year- -over-year to $323.6 million, while First Call had estimatesat $336.8 million. Same store sales fell 3.4% at domesticcompany-owned stores and fell 6.4% at domestic franchise stores. Atleast it is growing internationally.
What is interesting here is that the company does note the high costsfaced by its operators as consumers are reluctant tospend. In the past, pizza chains have been unable to mitigate cheesecosts as their main issue. But worry about the economy, should not keep peoplefrom being able to eat pizza at affordable chains like Domino’s.
Some pizza is a semi-luxury by the price of it, but Domino’s has alwaysbeen one of the bargains out there for families ordering pizza. Three medium one-topping pizzas at $5.55 per pizza isn’t exactly a stretchfor families wanting to save money. Its sandwich, chips, and soda for$6.99 might not be a steal, but this sounds much more like there areother issues. Maybe pizza eaters are choosing to buy their pieselsewhere.
Jon C. Ogg
October 14, 2008