Domino’s CEO predicts industry-wide troubles after weak results
Investing.com -- Domino's Pizza stock fell 10% in morning trading on Monday after the company reported weaker-than-expected U.S. same-store sales growth and lowered its full-year forecast, with CEO Russell Weiner warning that other fast-food chains will likely report similar struggles.
The pizza chain's domestic same-store sales rose just 0.9%, missing the 2.3% growth expected by Wall Street analysts, based on StreetAccount estimates. Domino's also lowered its full-year U.S. same-store sales forecast to low-single digit growth, down from its prior projection of 3% growth.
Weiner told CNBC on Monday that he expects more fast-food chains to report headwinds from winter weather and weak consumer sentiment, which declined in March due to rising fuel prices caused by the U.S.-Israeli war with Iran.
"One of the bad things about reporting first is you don't get to hear about anybody else," Weiner said.
Domino's also faced increased competition from rival pizza chains Papa John's and Pizza Hut. Weiner said competitors are responding to Domino's market share gains with new promotions, though he still expects Papa John's and Pizza Hut to report same-store sales declines for the quarter.
"Domino's has got a bigger advertising budget than our second two competitors combined," Weiner said. "And those competitors are both going up for sale, so we know things aren't good there right now."
Shares of Domino's have lost nearly a third of their value over the past year, with the company's market cap falling to roughly $11.2 billion.
Starbucks is scheduled to report earnings after the bell on Tuesday, while Chipotle Mexican Grill and Pizza Hut owner Yum Brands (Yum also owns KFC and Taco Bell) are expected to share results on Wednesday. Papa John's will report earnings next Thursday.
