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Overall, the anticipated dramatic upsurge in retail sales and margins will reflect in considerable escalation in profits and free cash flows on a secular basis, in our opinion.Īlthough, DPZ is likely to encounter near-term headwinds, we remain upbeat on the firm on a long-term basis. The revenue leverage from the potential sharply higher retail sales will come on top of the opportunities for margin expansion described above, driving further operating leverage. In addition, based on our longer-term expectations of lower commodity costs and no shortage of labor, as well as improvements in operations, and economies of scale and scope related to corporate spending, the digital platform, and advertising, we anticipate significant margin expansion. Nevertheless, based on dramatic success in international markets, DPZ will handily achieve its two to three year retail sales growth target of ~6% to ~10%, in our assessment. Domestically, we expect relatively slower revenue growth, with footprint expansion driving most of the advance in retail sales, and same-store sales growth remaining tepid. Over the long-term, the international business will drive most of DPZ's revenue growth, through a substantial increase in the store count as well as significant same-store sales growth, leading to dramatic upsurge in retail sales. Overall, although we expect revenue leverage from rising retail sales to mitigate some contraction in margins due to inflation, growth in earnings and free cash flows is likely to decline on a year-over-year basis, over the short-term, in our judgment. However, margins are likely to suffer led by persisting inflationary pressures in the U.S., and exacerbated by higher commodity costs in international territories due to the Ukraine war. In addition, growth in the foreign business is likely to accelerate propelled by the further relaxing of pandemic restrictions across numerous countries, in particular in regions where a majority of DPZ's sales are derived from dine-in transactions. business to improve somewhat towards the back half of the year, as labor conditions ease, driven by initiatives implemented by the company as well as an increase in availability of relevant talent. Given the scenario, although we anticipate improvement in the international business, which will counter some part of the potential weakness in domestic financial outcomes, earnings growth on an annualized basis will probably come in lower than that evidenced over recent years, in our opinion.īeyond the first quarter, we expect DPZ's U.S. Moreover, given that commodity cost inflation remained a feature during the first quarter, overall margins will probably be impacted, despite some changes in pricing enacted in January and March. In addition, the absence of the stimulus package and unemployment benefits which fueled customer demand last year will also reflect in a weaker top-line.

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To be specific, the labor shortage, including driver scarcity, that drove a demand and supply mismatch, with the company having to limit service over the fourth quarter, likely persisted over the first quarter. business, we expect relatively muted first quarter growth in revenues and earnings. Based on continued headwinds associated with the U.S. The average consensus revenue and earnings per share estimates for the quarter are ~$1.03 billion and $3.09. Luckily we don’t have a demand problem right now.Jetcityimage/iStock Editorial via Getty Images Investment Conclusionĭomino's Pizza ( NYSE: DPZ) is scheduled to report F1Q2022 earnings on April 28, 2022, before the market opens.

“Nothing is off the table, but I’ve got a lot of faith in the Domino’s system,” Weiner said. “But like I said, our job is to fulfill the demand that customers have for us. When asked by an analyst in the company’s last quarterly earnings call in April if Domino’s would consider partnering with third-party aggregators, Chief Operating Officer Russell Weiner didn’t say no. If that were to happen, estimates for same-store sales would increase, Tower said.ĭomino’s is expected to release its second-quarter earnings results on July 21. Tower said that Dominos has “signaled a degree of openness” to the idea of using third-party delivery apps. Shares for the pizza company have fallen about 30% from their closing peak of $564.33 in December 2021. Tower added that search placement on third-party delivery platforms is an “efficient and growing advertising mechanism” that Domino’s is missing out on.ĭomino’s stock is down 29% this year and 15.5% in the last 12 months to $400.90.

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