Domino's Pizza fell short of Wall Street estimates for third-quarter US comparable sales growth on Thursday as restaurant operators intensified their pursuit for price-conscious customers by doubling down on value offers.
The world's largest pizza chain has ramped up promotions and deals and refreshed its loyalty program to provide more frequent rewards at lower price tiers.
Still, bumped up promotions by burger chains, such as McDonald's $5 meal deal, in the second half of the year could be pressuring demand for Domino's usually value-driven pizzas, analysts have said.
Foot traffic at Domino's for July through September increased 8.3% on an average, compared with a year earlier, slower than the average 10.7% in April-June, according to data from Placer.ai.
In comparison, foot traffic rose 0.3% for McDonald's for July through September.
'Current Strategy'
Domino's U.S. same-store sales increased 3% in the three months ended September 8, below expectations of 3.6% rise, according to estimates compiled by LSEG.
This week, Domino's brought back its emergency pizza offer, extending until January 19. The deal, which helped drive sign-ups for the company's loyalty program last year, allows customers to redeem a free pizza on some online orders within 30 days.
"Domino's continues to lead peers given the positive traffic report. Average check may suffer from discounting. But we believe the current strategy will drive market share growth," said Jim Sanderson, analyst at Northcoast Research.
International same-store sales growth of 0.8% was below expectations of 2.9%, with the company trimming its annual global retail sales growth target to 6% from an earlier forecast of 7% rise.
Markets in Asia and Europe saw pressure from weak macroeconomic conditions as well as underperformance at its stores, while increasing geopolitical tensions weighed on sales in the Middle East in the quarter.
Domino's also cut its global net store growth target for the second straight quarter.
Still, higher franchise royalties and fees and margin growth in its supply chain business helped Domino's third-quarter profit per share of $4.19 beat estimates of $3.65.
Shares of the company were down 1.5% in early trading.
