Shares of Domino’s Pizza Inc. (NYSE: DPZ) dropped 1.9% in premarket trading on Monday following the release of their second-quarter financial results. While the pizza chain exceeded profit expectations, they reported a surprising decline in revenue due to a decrease in market basket pricing to stores.
Strong Profit Growth
Domino’s net income rose to $109.4 million, or $3.08 per share, compared to $102.5 million, or $2.82 per share, in the same period last year. This surpasses the FactSet consensus for earnings per share of $3.06.
Unexpected Revenue Decline
Despite the increase in profit, revenue declined by 3.8% to $1.024 billion from $1.065 billion. The FactSet consensus predicted a rise to $1.072 billion. This unexpected decline in revenue can be attributed to the decrease in market basket pricing to stores.
Positive Same-Store Sales
U.S. same-store sales showed a slight increase of 0.1%. This growth was overshadowed by the 2.4% decrease in market basket pricing to stores. However, U.S. franchise royalties and fees experienced an uptick.
Recent Partnership Announcement
The earnings report comes on the heels of Domino’s stock surging 11.1% on July 12 due to a significant announcement. The company revealed that they will be listing their menus on popular food-delivery apps, Uber Eats and Postmates, in the coming months.
Steady Stock Performance
Over the past three months, Domino’s Pizza stock has performed strongly with a 16.7% increase. In comparison, the S&P 500 has gained 9.7% during the same period.
Despite the decline in revenue, Domino’s Pizza remains hopeful that their new partnership with food-delivery apps will help drive growth in the future. Investors will be keeping a close eye on any further developments.