Domino's ( DPZ ) stock fell more than 6% at market open after the pizza chain posted fourth quarter results that mostly missed Wall Street's expectations.
Domino's reported Monday that revenue increased 2.9% year over year to $1.44 billion in the fourth quarter, driven higher by a 4.4% increase in revenue from higher order volumes and food and cardboard prices sold to stores. Same-store sales increased 0.4% compared to the 1.72% jump the Street predicted. Adjusted earnings came in lower too, at $4.89 per share compared to an estimate of $4.93.
Domino's also missed expectations on full-year revenue and earnings but beat slightly on international same-store sales growth, which increased 1.6%. 2024 marked the 31st consecutive year of same-store sales growth.
During the earnings call, Domino's CEO Russell Weiner acknowledged the current competitive environment, even as he touted that the company's value strategy helped drive a 1% gain in US market share for quick-service pizza restaurants.
"As we look ahead to 2025, we believe the combination of pressured consumer spending and a value-driven QSR marketplace will continue," he told investors.
For the quarter, US sales ticked 0.4% higher, less than the 1.72% gain the Street wanted. In-store pickup orders increased 3.2% while delivery orders fell 1.4%, "impacted by continued macro and competitive pressures that put pressure on our low-income customers," CFO Sandeep Reddy said.
"It seems that the market is largely converging with our view that 2025 will be a really challenging year for Domino's before consumer spending growth inflects in 2026," said Morningstar analyst Sean Dunlop, who views Domino's valuation as a bit expensive.
Shares of Domino's are up 5% year to date versus a 2% gain for the S&P 500 ( ^GSPC ).
Earnings overview
Here's what Domino's reported in the fourth quarter, compared to Wall Street consensus estimates compiled by Bloomberg:
Here's Domino's reported in its fiscal 2024 results, compared to Bloomberg consensus estimates:
For the full year, Domino's expects US same-store sales growth to be in line with its 3% long-term guidance and international same-store sales are expected to increase 1% to 2% for the year. Reddy said a better back half of 2025 is expected "as a result of our expected traffic driving catalysts in aggregators and loyalty."
Domino's store footprint, partnerships
The company opened 364 stores in the fourth quarter and 775 stores for the full 2024 fiscal year.
Challenges around Domino's international unit growth were expected to be a "key focus for longer-term investors" going into this report, Tower said prior to results.
Many analysts were focused on its largest franchisee, Domino's Pizza Enterprises , which plans to close 205 unprofitable locations. The majority of those restaurants will be in Japan. Stifel analyst Chris O'Cull anticipates the closures will result in a roughly 100 basis point headwind to global net unit growth in 2025.
"By the end of the year, I think those closures will be behind us," Weiner said. "Our two largest growth markets, China and India, remain on track. China opened up 240 stores last year. They're talking now 300 to 350 ... the growth in the rest of the system is really strong."
Weiner noted that if tariffs go into effect, its US supply chain business won't see a "a meaningful impact" given it sources most of its food within the US. However, it expects its food basket "to be up low-single digits."
"Expect increases to be higher in the first half than the second half, primarily driven by cheese prices," Weiner added.
Domino's partnership with third-party order platform Uber ( UBER ) added 2.7% to the US same-store sales mix for the third quarter, near its 3% target. Weiner confirmed third-party delivery remains a $1 billion opportunity but said the timing of adding on other third-party delivery platforms like DoorDash ( DASH ) will be "pushed out" so that the company can manage the higher incremental volume.
Innovation around stuffed crust pizza, which could come in the second half of 2025, could also be a boon, Deutsche Bank research analyst Lauren Silberman said prior to the results.
Weiner would not confirm if or when this would come to the US but noted that the pizza chain typically rolls out two forms of innovation each year.
Other initiatives to drive same-store sales in the US this year include the company's loyalty program, app and website upgrades, and value platforms, Silberman noted. Domino's plans to roll out a new e-commerce platform in the US this year.
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BrookeDiPalma