Domino’s Pizza shares tumbled following weaker-than-expected earnings and same-store sales growth in the United States.
Same-store sales for the pizza chain increased by only 0.9%, lower than the 2.3% expected by Wall Street analysts.
Earnings per share came in at $4.13, down from $4.33 the same time last year and below expectations of $4.27.
“We’re not happy with it,” CEO Russell Weiner told CNBC.
The pizza chain also lowered its full-year U.S. same-store sales forecast to low-single digit growth, down from its prior projection that U.S. same-store sales would increase 3%.
Domino’s kicked off the earnings season for restaurant chains, and Weiner said he expects more fast-food chains to report similar headwinds.
He said this would likely be caused by winter weather and weak consumer sentiment, which took a dive last month due to spiking fuel prices caused by the U.S.-Israeli war with Iran.
“One of the bad things about reporting first is you don’t get to hear about anybody else,” Weiner said.
Dominos also faced tougher competition this quarter from rival pizza chains like Papa John’s and Pizza Hut, which both matched Dominos US$9.999 “Best Deal Ever” with promotions at the same price point.
And Little Caesars undercut Domino’s $6.99 Mix & Match deal with a $5.99 version.
“People are seeing what we’re doing, and they’re sick of losing share, and they’re coming at it,” Weiner said.
He also said that he expects Papa John’s and Pizza Hut to report a decrease in same-store sales.
However, Weiner said he is confident Domino's will prove itself in the long run.
“Domino’s has got a bigger advertising budget than our second two competitors combined,” he said.
“And those competitors are both going up for sale, so we know things aren’t good there right now.”
Yum announced in November that it was exploring strategic options for Pizza Hut, including a sale, and Papa John’s is reportedly in talks with Qatari-backed Irth Capital to go private.
Both chains also announced plans to close hundreds of restaurants this year.
At the time of writing, Domino's (NASDAQ: DPZ) shares fell 8.84% to $335.50. Its market cap is $11.28 billion.
The company’s shares have fallen 31.14% over the past year.
