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    Domino's Reports Impressive Q2 Results

     

    Domino's Reports Impressive Q2 Results - Kandessa Media

    Domino's Pizza released its earning report for its second quarter ended June 19. Domestic same store sales were up 4.8 percent from last year's (LY) same quarter, and outside the United States, same store sales surged 7.4 percent. The quick serve pizza chain reported diluted EPS of 40 cents, up 21 percent from LY's adjusted diluted EPS.

    Financial highlights for Domino's Q2:

    • Total revenues were up 6.2 percent from LY, mainly due to same store sale growth and store count increases internationally, offset by the sale of 26 company-owned stores.
    • Global retail sales grew 9.6 percent, excluding impact of foreign currency impact.
    • Net Income was $25.2 million, a 11.6 percent increase from LY, primarily from robust same store sales  growth globally, international store count increases and lower interest costs.
    • Consolidated operating margin increased to 28.8 percent, a 1.1 percentage-point increase from LY, mainly due to fewer company-owned stores and increased franchise royalty revenues.
    • Diluted as-reported EPS was 40 cents vs. 37 cents LY. Adjusted diluted EPS of 40 cents was up 21 percent from LY's 33 adjusted diluted EPS.
    • Although domestic store count was down, international stores grew by 72 units, netting a 52 store increase for the quarter.
    • Year-to-date net income was $52.4 million, according to Domino's, a 11.3 percent increase
    • Domino's generated $36 million of free cash flow in the first half of 2011

    The company expects its tracker program on delivery to yield more retention of customers and to help gain market share. Domino's conference call, that cheese block prices had initially increase 20 percent vs. last year to $1.68 on average, and were recently higher than $2.00. Commodity prices, according to Patrick J. Doyle, Domino's president, continue to challenge margins.

    However, dollar commodity price increases are passed on to franchisees, with the supply chain mark-up remaining constant. On a percentage basis, the increases cause a margin erosion on supply chain income as a percent of total revenues; furthermore, the dollar increases affects franchise operating margins.

    "The growth of the business in the past quarter has been driven by increased retention and frequency, rather than new customers," said Doyle on an investor conference call.

    Doyle expressed that the IPhone app was bringing in incremental customers and that the user ratings were high, ahead of most competitors. He also suggested that market performance was fairly disbursed in North America, however he was most pleased with Mexico's performance since last fall.

    In response to a question whether an Android app was in development, Doyle remarked "We want to be where our customers are...stay tuned."

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    (07-26-11)

    Source: Domino's Pizza

    Copyright: Kandessa Media. All rights reserved.

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    This story appears in:  Fast Food