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Domino's international sales miss estimates, shares slide

July 25, 2017 7:57 AM EDT

FILE PHOTO: The sign of a Domino's Pizza restaurant is seen in Paris, France, October 27, 2016. REUTERS/Charles Platiau/File Photo

(Reuters) - Domino's Pizza Inc (NYSE: DPZ) reported quarterly international same-restaurant sales that fell short of analysts' estimates, overshadowing strength in the United States and sending its shares down almost 10 percent in morning trading on Tuesday.

Domino's international same-store sales rose only 2.6 percent, almost half the 5 percent growth analysts estimated in a Consensus Metrix poll.

Sales in some international markets were challenging in the second quarter, Domino's Chief Financial Officer Jeffrey Lawrence said on a conference call, adding the dollar's strength, particularly against the British pound, also reduced international royalty revenues.

The average value of the dollar against a basket of major currencies had risen almost 4 percent in the quarter ended June 18, compared with the year-earlier period.

Chief Executive Patrick Doyle said issues in the international business were "easily categorized as correctable."

The company's franchise, Domino's Pizza Group Plc (NYSE: DOM), UK's biggest pizza delivery firm, said on Tuesday its like-for-like sales growth in the first half of the year was lower than a year earlier.

Domino's weak international results were in contrast to those of rival McDonald's Corp (NYSE: MCD), which reported better-than-expected sales across all geographies and highlighted strength in UK, China and Japan.

However, same-store sales at Domino's-owned outlets in the United States, its biggest source of store revenue, jumped 11.2 percent in the second quarter, crushing the 7.70 percent rise analysts had expected.

Net income rose to $65.7 million, or $1.32 per share, in the quarter ended June 18, from $49.3 million, or 98 cents per share, a year earlier.

Domino's said the adoption of a new accounting standard in the first quarter boosted profit by 21 cents per share in the latest reported quarter.

The company's revenue rose 15 percent to $628.6 million, marking its fifth straight double-digit quarterly growth in percentage terms.

Analysts on average had expected a profit of $1.23 per share and revenue of $614.4 million, according to Thomson Reuters I/B/E/S.

Domino's international outlets totaled 8,601 units, while in the United States it had 5,399 restaurants at the end of the quarter.

(Reporting by Karina Dsouza and Sruthi Ramakrishnan in Bengaluru; Editing by Maju Samuel and Amrutha Gayathri)



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