By Anuja Bharat Mistry and Shania S Thomas
July 20 (Reuters) – Domino’s Pizza’s quarterly revenue edged past Wall Street estimates on Monday as growth in its supply-chain business offset softer demand at its restaurants, where cautious consumers curbed discretionary spending.
Shares of the company, which had fallen about 23% this year, were up about 7% at $343.50 in premarket trading.
The pizza chain operates a supply-chain business that manufactures and distributes ingredients, pizza dough and equipment to franchised and company-owned stores. Revenue rises when stores order more supplies or food prices increase.
The Ann Arbor, Michigan-based company’s second-quarter revenue rose 4.3% to $1.19 billion, edging past estimates of $1.18 billion, helped by a 6.5% rise in quarterly supply-chain revenue to $731.7 million.
Domino’s said supply-chain revenue rose on higher order volumes from stores and a 2.2% increase in food-basket pricing, reflecting modest inflation in the ingredients and supplies it sells to franchisees.
“I believe order growth is the most important driver of long-term success in our business,” Domino’s retiring CEO Russell Weiner said in a statement, adding that order volumes rose despite weak industry demand.
Same-store sales in the U.S., however, rose only 0.1% for the quarter ended June 14, short of analysts’ estimates for a 0.62% rise, according to data compiled by LSEG. Sales rose 3.4% a year ago.
“Positive transaction counts across both carryout and delivery are a bright spot, indicating the firm is still winning with consumers, albeit at lower check sizes,” said Ari Felhandler, analyst at Morningstar.
The pizza chain’s second-quarter U.S. same-store sales growth was the slowest in five quarters as concerns over higher living costs and a sluggish U.S. labor market discouraged consumers from spending on dining out.
Its international same-store sales posted a surprise fall of 0.1%, compared with estimates of a rise of 0.5%. A year ago, sales were up about 2.4%.
Domino’s cost of sales rose 4.7% to $716.2 million from a year ago. Quarterly profit came in at $4.07 per share, below estimates of $4.17 per share.
(Reporting by Anuja Bharat Mistry and Shania S Thomas in Bengaluru; Editing by Tasim Zahid)
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