Domino's: weak domestic sales lead to 55% profit plunge in 3rd Q

Nation's Restaurant News,  Oct 29, 2007  

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ANN ARBOR, MICH. -- Citing a "challenging domestic environment" and higher interest expenses from larger debt levels, Domino's Pizza Inc. posted a 55.2-percent drop in third-quarter net income and a 1.6-percent dip in domestic systemwide same-store sales.

The same-store sales result reflects a 2-percent drop at Domino's U.S. franchised locations and a 0.8-percent uptick at its U.S. corporate units. The company currently operates about 565 domestic stores and franchises an additional 4,571 domestic units. The latest same-store sales result marked a return to negativity that had ended when Domino's snapped a string of five quarters of declining results with a 2.1-percent same-store sales gain in the second quarter. Several analysts now predict that Domino's, which boasts a system of 8,510 locations worldwide, won't sustain a turnaround until next year.

"Unprecedented cost pressures and a weak consumer environment negatively impacted our domestic results, which made striking the right balance between increasing prices, while operating in a period of declining traffic, very difficult," David Brandon, chairman and chief executive, said in a statement.

Domino's international fleet scored a same-store sales jump of 8.3 percent for the third quarter, the highest result in nearly three years and the 55th consecutive quarter of international same-store sales growth, the company reported.

Domino's net profit for the quarter ended Sept. 9 was $11 million, or 11 cents per share, versus a year-earlier $24.5 million, or 39 cents per share. Increased interest expenses took a 13-cent-per-share bite out of the latest quarter's net result, Domino's said. Revenue rose 3.3 percent to $337.3 million.

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