Domino's Pizza posts smaller-than- expected rise in comparable sales as demand stutters

Introduction

Domino's Pizza reported a smaller-than-expected 3% rise in U.S. same-store sales for Q3, missing the anticipated 3.6%. High inflation and rising menu prices have deterred consumers, leading to weaker demand for dining out. This comes despite an 8.3% growth in foot traffic, slower than last quarter.

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 Performance Analysis

Domino’s faced challenges as high menu prices and inflation continued to impact consumer spending. Same-store sales grew by 3%, lower than the 3.6% forecast, signaling a slowdown in demand. The company has been trying to attract customers with discounts, but competition, particularly from fast-food chains in the ongoing "burger wars," is making growth difficult.Domino’s international sales also disappointed, growing only 0.8% versus the expected 2.9%, reflecting weak demand in some markets.

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Future Outlook

Domino's has adjusted its 2024 global retail sales growth forecast to 6%, down from the earlier 7%. The company also revised its store expansion target, planning to open 800-850 stores, down from the previous estimate of 825-925 new stores.Despite the sales shortfall, Domino's reported stronger-than-expected diluted earnings per share (EPS) at $4.19, beating the estimated $3.65.

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Conclusion

Domino's Q3 performance highlights the challenge of balancing inflation-driven price increases with consumer demand. With the fast-food market becoming more competitive and demand pressures rising, Domino’s is reassessing its growth expectations for the future.

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