Domino’s Pizza Inc.’s stock
DPZ,
slid 2.6% in premarket trade Thursday, after the pizza chain posted weaker-than-expected revenue for the third quarter.
The company reported net income of $147.7 million for the quarter — or $4.18 a share — up from $100.5 million, or $2.79 a share, in the year-earlier period.
Revenue fell to $1.027 billion from $1.069 billion a year ago.
The FactSet consensus was for EPS of $3.31 and revenue of $1.050 billion.
Revenue was weighed down by lower supply chain revenue and lower U.S. company-owned store revenue.
U.S. same-store sales fell 0.6%. The company closed its remaining 143 stores in Russia during the quarter after the franchisee that operated them filed for bankruptcy, although the company has not received fees or royalties from Russia since its invasion of Ukraine.
The company said it now expects its 2023 global net store growth to trend at or slightly below the low end of its 5% to 7% two- to three-year target. It expects full-year global retail sales growth, excluding any impact from foreign currency, to be “modestly” below the mid-point of its 4% to 8% two- to three-year outlook.
Jefferies reiterated its hold rating on the stock and said it “appears to fairly reflect the long-term growth opportunity and potential for key initiatives to drive positive same-store sales growth into 2024, despite a difficult demand/competitive backdrop in the delivery pizza category.”
Analysts led by Alexander Slagle said they would look for comments on the earnings call on the Uber Eats partnership, rewards-program overhaul, and an early read on other external headwinds, which could include an impact from the new class of weight-loss drugs called GLP-1, which work by mimicking the effect of a gut hormone that can help control blood-sugar levels and reduce appetite.
Read now: Domino’s sees $1 billion in new sales from aggregators like Uber Eats, eventually
GLP stands for glucagon-like peptide. The drugs are already being discussed as an overhang for food and beverage companies as they encourage people to eat less and avoid high-calorie foods.
The already-popular drugs Ozempic and Wegovy are expected to grow to an audience of 24 million, or nearly 7% of the overall U.S. population, in the next decade, according to a Morgan Stanley note from August.
Read now: As Ozempic/Wegovy frenzy continues, Morgan Stanley lifts forecasts for weight-loss drugs to $77 billion
Domino’s stock has gained 2.2% in the year to date, while the S&P 500
SPX,
has gained 14%.
For more, read: The dark side of the weight-loss-drug craze: eating disorders, medication shortages, dangerous knockoffs
Related: Ozempic and Wegovy aren’t affecting PepsiCo’s business much—but this growing trend is
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