- Dominos shares dropped nearly 10% after flagging slower growth and sales misses
- US same-store sales forecast lowered to low-single digits for fiscal 2026 from 3%
- Q1 US sales rose 0.9%, missing estimates of 2.72%, first miss in a year for Dominos
Shares of Domino's Pizza fell nearly 10% in early US trading on Monday after the company flagged softer-than-expected growth, underscoring mounting pressure on consumer spending and intensifying competition in the quick-service restaurant space.
The pizza chain operator now expects US same-store sales to grow in the low-single digits in fiscal 2026, below its earlier projection of around 3%. The cautious outlook comes as diners pull back on discretionary spending amid elevated living costs and a fragile labour market.
The company's first-quarter US comparable sales rose just 0.9%, missing analysts' expectations of a 2.72% increase, according to LSEG data.
According to Reuters, this marks Domino's first such miss in a year. Internationally, same-store sales declined 0.4%, also falling short of estimates for a 0.7% rise.
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“Competition within the QSR pizza space also increased in Q1 as the national pizza players offered deals comparable, if not identical, to the renowned value Domino's has made famous,” CEO Russell Weiner said during an earnings call.
Weiner added that consumer sentiment dropped to COVID-era lows in March, with inflation continuing to weigh on household spending decisions.
Rising transportation costs, partly linked to tensions in the Middle East, have further added to pricing pressures, making dining out less attractive for many consumers.
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To counter slowing demand, Domino's has leaned into aggressive discounting, reviving its $9.99 “Best Deal Ever” and promoting offers such as “Mix and Match” and “Emergency Pizza,” alongside new product launches like a Parmesan-stuffed crust pizza.
“The firm delivered positive transaction growth, but the weak figure likely reflects the discount intensity needed to lure consumers,” Ari Felhandler, analyst at Morningstar, said.
Domino's also announced a $1 billion share buyback programme. However, quarterly earnings per share fell to $4.13 for the period ended March 22, from $4.33 a year ago, impacted by a $30 million pre-tax charge tied to certain investments. Analysts had estimated earnings of $4.27 per share.
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