Domino's Pizza, Inc. (NYSE: DPZ), the planet's biggest pizza company, recently dished out its Q3 2023 earnings report, delivering a mix of good news and a bit of a hitch – a dip in revenue. Here's a more straightforward look at what's going on and why it matters:
Global Sales and Same Store Sales
In Q3 2023, Domino's worldwide sales rose by 4.9%. However, if we take out the influence of foreign currency and consider the shutdown of Domino's in Russia, the growth went up to 5.1%. Even better, if we exclude foreign currency impact but still factor in Russia's closure, the growth hit 5.3%, showing strong performance in most parts of the world.
New Store Growth
We saw eight fewer Domino's stores globally in Q3 2023. Why? Well, Russia shut down its Domino's stores, which led to 35 international stores closing, but 27 new U.S. stores opened. If we ignore the Russian factor, there was a growth of 135 new stores, showing that Domino's is still growing.
Earnings Per Share (EPS)
The bright spot here is that Domino's saw its earnings per share (EPS) increase by a big 49.8% compared to the same quarter last year. It reached $4.18, which is quite impressive. This means Domino's is still making good money even though its revenue isn't through the roof.
Why the Revenue Went Down
The main reason for the dip in revenue was less money coming in from supplying ingredients and fewer sales at Domino's-owned U.S. stores. These factors are related to a pricing strategy that brought down the prices Domino's charges its stores. Also, the number of pizza orders went down in Q3 2023 compared to last year. Why? One possible explanation is that people might be feeling the pinch of inflation, making them more cautious about spending on pizza.
Some Domino's-owned U.S. stores made less money because they changed hands. A bunch of stores in Arizona and Utah shifted from being owned by Domino's to being run by franchisees. However, higher sales at existing U.S. company-owned stores partially made up for this change.
Income and Profits
Domino's made $13 million more in Q3 2023 than it did in the same period last year. This was because they made more money from stores globally and had better profits in their ingredient supply chain.
The overall profit jumped by $47.2 million, nearly 47%, in Q3 2023 compared to the same time last year. This was partly thanks to a special financial gain connected to an investment. Also, taxes went down, and other financial tweaks contributed to the profit rise.
Buying Back Shares and Financial Strength
Domino's went shopping and bought back a bunch of its own stock – almost 230,000 shares – for a whopping $90 million in Q3 2023. And they still have $199.5 million in the bank ready for more buybacks.
Big Plans Ahead
Domino's is upbeat and has a bunch of plans to keep growing. They're looking forward to more orders thanks to their "Summer of Service" and a partnership with Uber's delivery service. They're aiming to bring in even more orders in 2024 and beyond.
What's Next
Domino's gave us a peek into the future and said they expect more new stores worldwide, though not as many as they were hoping for. Also, their sales growth worldwide might be a bit lower than they expected because of changes in foreign currency values.
To sum it up, Domino's Pizza delivered strong sales worldwide but had a bit of a stumble in the U.S., possibly because of inflation and changing appetites. As Domino's figures out how to bounce back, investors will be watching to see how they adjust to the times and keep growing.