ANN ARBOR Mich. Domino’s Pizza Inc. reported Tuesday a 77-percent surge in third-quarter net income despite a slowdown in sales, as a lower amount of debt, cost-cutting measures and a tax benefit drove the bottom line.
For the quarter ended Sept. 6, Domino’s earned $17.8 million, or 31 cents per share, compared with earnings of $10.1 million, or 17 cents per share, in the same quarter a year ago.
During the latest quarter Domino’s retired $71.8 million of its fixed rate senior notes, which it said resulted in pre-tax gains of about $14.3 million. Through the first three quarters of the year, Domino’s has retired about $140.0 million in debt and booked pre-tax gains of about $48.4 million.
Domino’s chairman and chief executive, David Brandon, also said that cost controls drove the pizza franchisor’s profit gain, although he did not detail the measures.
“We did a good job of anticipating the economic downturn in the U.S. and we cut costs before the economy weakened,” Brandon said in a statement. “We have been intensely focused on controlled overhead spending throughout the past three years. As a result, we are now in a position to invest in our business, invest in our franchisees, invest in our marketing, invest in our technology, and expand our global footprint.”
Sales trends for the parent to the nation's largest pizza delivery chain remained weak, however, and corporate revenues were also hurt by foreign currency exchange rates. Total third-quarter corporate revenues for the operator or franchisor of 8,886 restaurants fell 6 percent to $302.7 million.
Same-store sales at domestic locations remained flat from the same quarter a year ago, and reflected a 2.0-percent decrease at corporate stores and a 0.3-percent uptick at franchised units. Domino’s international restaurants reported a same-store sales gain of 2.7 percent. In the third quarter of 2008, domestic same-store sales fell 6.1 percent and international same-store sales rose 5.4 percent.
“We’re making excellent progress ... and we’re in a great position to take full advantage of all of the opportunities we will encounter when domestic consumer spending improves and we return to a more normalized economic environment,” Brandon said.