Domino’s Q2 revenue tops estimates as supply-chain lifts sales

Ann Arbor, Michigan-based Domino’s reported second-quarter revenue of $1.19 billion for the quarter ended June 14, slightly above analysts’ estimates.

Supply-chain revenue rose 6.5% to $731.7 million, helped by higher order volumes from stores and a 2.2% increase in food-basket pricing. The company attributed the pricing change to modest inflation in the ingredients and supplies it sells to franchisees.

Domino’s restaurant operations were weaker. U.S. same-store sales increased 0.1% for the quarter, below analysts’ expectations and down from a 3.4% gain in the same quarter a year earlier. Executives pointed to consumers limiting discretionary spending amid higher living costs and a sluggish U.S. job market as factors weighing on dining-out demand.

Cost of sales rose 4.7% to $716.2 million, which pressured profitability. Quarterly earnings were $4.07 per share, below analysts’ expectations of $4.17 per share. The company reported the earnings shortfall was primarily driven by the higher cost of sales.

Shares, which had fallen about 23% year to date, rose roughly 7% in premarket trading after the results were released.

Retiring Chief Executive Officer Russell Weiner emphasized the importance of order growth for long-term performance, stating: ‘I believe order growth is the most important driver of long-term success in our business.’

Executives noted that quarterly sales growth has slowed after several stronger periods and pointed to cautious consumer behavior and inflationary pressures as factors affecting restaurant demand, while supply-chain operations continued to support revenue.