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Domino’s U.S. same-store sales rise 5.6 percent

Value offerings, loyalty program help Q4 performance

Domino’s Pizza, Inc. — after outlining an ambitious growth plan at their investor conference in January — grew domestic same-store sales 5.6 percent for the fourth quarter ended Dec. 30th 2018, driven by new units and ticket growth, CEO Richard Allison said in an earnings call Thursday. 

The quarter marked the 31st consecutive quarter of same-store sales growth for the Ann Arbor, Mich.-based pizza chain. Fourth quarter international same-store sales grew 2.4 percent. 

Revenues for the quarter increased 21.4 percent to $1.08 billion, from $891.5 million the same quarter the year prior. Net income was $111.6 million or $2.62 earnings per share, up 19.6 percent from $93.3 million or $2.09 earnings per share the same quarter the year prior.

But overall performance fell short of Wall Street expectations, causing shares to drop more than 9.3 percent on Thursday morning.

Allison said that Domino’s growth is going strong, despite a slight setback from a calendar change that did not include the push from New Year’s Eve sales in fourth quarter results.

“We are happy with comps growth for the U.S. in the fourth quarter,” he said during the earnings call. “It was driven by a healthy dose of transactions growth. […] We have been working with franchisees to figure out how we can grow tickets. It was not just raising prices willy-nilly across the board.”

Company CFO Jeff Lawrence attributed a significant portion of traffic gains to value-based promotions like the brand’s Piece of the Pie loyalty rewards program, which was extended ahead of the Super Bowl to reward customers points for eating any pizza, even from rival chains. 

“Our long-game approach, driven by fundamentals and the finest franchisee base in QSR across the globe, continues to pace the industry,” Richard Allison said in a statement Thursday. 

This long-game approach features a dominant strategy of fortressing, or increasing the number of restaurants in the same market in order to cut down on driving and customer wait times. At the investor conference, Domino’s also confirmed that it will be heavily investing in international unit growth, as reflected by the 435 locations opened internationally in the fourth quarter of 2018, in addition to 125 U.S. stores opened during the quarter. 

As of Dec. 30, Domino’s Pizza has 15,914 locations globally.

For the fiscal year ended Dec. 30, Domino’s posted revenue of $3.4 billion, up 18 percent from $2.8 billion the previous fiscal year. Net income for the fiscal year rose 23.2 percent to $3.62 billion.   

Contact Joanna Fantozzi at [email protected]

Follow her on Twitter: @JoannaFantozzi 

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