Domino's U.S. same-store sales, profit beat estimates, shares jump 20%


(Reuters) – Domino’s Pizza Inc (DPZ.N) on Thursday reported quarterly U.S. same-store sales and profit above analysts’ estimates, as its focus on faster delivery and new promotions to lure diners paid off, sending shares up nearly 20%.

FILE PHOTO: A Domino’s Pizza sign sits on the top of a delivery car outside a restaurant in Los Angeles, California, U.S. July 18, 2018. REUTERS/Lucy Nicholson/File Photo

Sales at its established U.S. restaurants rose 3.4% in the fourth quarter, beating estimates for the first time in over a year. Analysts had projected a rise of 2.3%, according to IBES data from Refinitiv.

The pizza chain has been opening new stores, launching new menu items and offering faster deliveries to battle competition from rival pizzerias, mom-and-pop stores and aggregators such as Uber Eats, Postmates and GrubHub (GRUB.N).

As third-party delivery services make it easier for diners to order a variety of food to their door step at the touch of a button, chains like Domino’s have been investing heavily to keep customers coming back for their fast service and offers.

As a part of these efforts, Domino’s offered half off on menu-priced pizzas for online orders during the Cyber Monday week and also expanded its GPS delivery tracking technology across its U.S stores during the reported quarter.

“Our relentless focus on our customers, our franchisees … helped us deliver a solid 2019 in the face of unique competitive headwinds,” Chief Executive Officer Ritch Allison said.

The Ann Arbor, Michigan-based company has also been aggressively opening new restaurants in a move it calls “fortressing” to facilitate faster delivery to more locations.

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Rival Pizza Hut, owned by Yum Brands Inc (YUM.N), however, reported disappointing results earlier this month, as stiff competition took a bite out of sales.

At Domino’s international same-store sales rose 1.7%, missing estimates of a 2.09% rise.

Net income rose to $129.3 million, or $3.12 per share, in the three months ended Dec. 29, from $111.6 million, or $2.62 per share, a year earlier.

On an adjusted basis, the company earned $3.13 per share, 15 cents above expectations.

Total revenue rose 6.3% to $1.15 billion, beating estimates of $1.13 billion.

The company’s shares, which were last up 19.5% at $355 before the bell, are set to open at a record high on Thursday.

Reporting by Nivedita Balu in Bengaluru; Editing by Shounak Dasgupta and Shinjini Ganguli



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