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Domino’s Gains on Tackling Supply Chain Hurdles, Leadership Rejig

Published 01/03/2022, 17:04
© Reuters.
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By Dhirendra Tripathi

Investing.com – Domino’s stock (NYSE:DPZ) stock gained 2.5% Tuesday after the company overcame supply chain challenges and higher inflation in commodities to grow its revenue and profit in the fourth quarter.

The company also announced top level changes. Its operating head Russell Weiner takes over as CEO from Ritch Allison starting in May. Weiner joined the company as chief marketing officer in 2008 and has been the chief operating officer for Domino's U.S. since July 2020.

Sales in 2020 had benefited from an extra week that contributed over $88 million to revenue in the fourth quarter of the year.

According to Domino’s, global retail sales in the quarter ended Jan. 2 rose 9%, excluding the negative impact of foreign currency and the 53rd week. The company had global net store growth of 1,204 stores in 2021, comprising 205 net U.S. store openings and 999 internationally on a net basis. This led to higher supply chain and global royalty revenue for the pizza-maker.

Operating margins suffered due to inflation in cost of raw materials and ingredients.

Advertising incentives of $6.5 million related to promotions hurt revenue. Total revenue in the quarter was $13.4 billion and fell short of estimates. Cost of sales rose 2% on higher raw material prices.

Quarterly net income rose 2.5% to $3.8 million, driven primarily by a pre-tax unrealized gain on the company's investment in DPC Dash, the master franchisee that owns and operates Domino's Pizza stores in China.

The company does not provide quarterly or annual earnings guidance although on a two-three-year basis, it expects global retail sales growth, excluding foreign currency impact, to come in at 6% to 10%.

 

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