Dominos Pizza reports lower than expected sales results in the United States as customers cut back

Domino’s reported its first quarterly sales decline in the United States in a year on Monday.

The company also announced a $1 billion share buyback program.

Domino’s stock price dropped approximately 10% in the afternoon.

According to information from a conference call in paragraphs 3 and 10; an analyst’s comment in paragraph 5; additional context in paragraphs 8 and 9; by Anuja Bharat Mistry.

Domino’s Pizza projected a more moderate growth in annual sales at its US and international stores, citing low consumer morale and intense competition affecting demand, resulting in a 10% drop in its stock price.

Consumers facing high living costs and a sluggish job market are under added pressure as Middle East tensions drive up transportation costs, fueling inflation fears and reducing discretionary spending, particularly on restaurant meals.

Consumer morale hit a new low in March since the start of the COVID-19 pandemic, with inflation influencing purchase decisions, said CEO Russell Weiner during a results conference call.

The world’s largest pizza chain operator expects low single-digit comparable sales growth in the US and internationally in 2026, contrasting with previous forecasts of a 3% rise in US sales and 1% to 2% internationally.

“The rise in food prices and energy costs is already impacting short-term profits, but if fuel price hikes deter consumers from spending, it will be felt in the next two quarters – that’s why the outlook is more cautious at the moment,” said Brian Mulberry, marketing strategy director at Zacks Investment Management.

The company’s US comparable sales rose by 0.9% in the first quarter, below analysts’ average estimate of a 2.72% increase, marking its first deviation from forecasts in a year, according to data compiled by LSEG. A year ago, sales had decreased by around 0.5%.

“Domino’s may be facing a tougher American market than expected. Inflation and economic slowdown, especially for low-income consumers, have weighed on its sales,” said Bruce Winder, independent retail consultant.

To attract price-conscious customers, Domino’s launched offers such as the “Best Deal Ever” at $9.99, as well as “Mix and Match” and “Emergency Pizza” deals, aligning with a general trend of financial accessibility, with McDonald’s and Burger King also ramping up low-price offers.

Domino’s even expanded its menu by introducing, among other items, a parmesan-stuffed crust pizza.

“The competition in the quick-service pizza sector intensified in the first quarter, with national players offering comparable, if not identical, deals to those that have made Domino’s reputation for price-value,” said Mr. Weiner.

The company, which announced a $1 billion share buyback, saw a 0.4% decline in quarterly international constant perimeter revenue, missing the estimated 0.7% increase.

Its earnings per share of $4.13 fell short of the $4.27 estimate, impacted by a $30 million pre-tax charge related to certain investments.