ANN ARBOR Mich. Domino’s Pizza Inc., parent of the mostly franchised 8,394-unit Domino’s chain, reported an earnings plunge of 90.5 percent for its second quarter on the negative impact of a debt recapitalization completed in April and legal fees in a California wage and labor lawsuit.
The chain’s same-store sales returned to positive territory for the first time in six quarters, however, which company management said was “particularly important” during a time of increased labor, commodity and energy prices. Despite a quarterly same-store sales gain of 2.1 percent at domestic Domino’s locations, the company said the current cost environment could lead to “material price increase[s]” in the pizza segment.
For the quarter ended June 17, Domino’s earned $2.3 million, or 4 cents per share, versus year-ago second-quarter earnings of $24.5 million, or 39 cents per share. Costs for the recapitalization — which included increased interest expense that totaled 21 cents per share — and legal fees negatively impacted per-share earnings in the latest quarter by 24 cents.
Revenue rose 3.8 percent to $340.3 million, mostly on an increase in domestic distribution revenues that includes sales of food and cheese to franchisees.
The company reported that it reserved $5 million during the second quarter for future potential losses related to the California Supreme Court ruling on allegations that Domino’s failed to provide meal and rest breaks to employees.