DOMINOS PIZZA INC Q3 FY2024 earnings call

• US Performance: Leaned into renowned value, gained market share, with 4 consecutive quarters of same store and order count growth. Launched new mac and cheese in late September as part of pasta lineup innovation. Had a strong Q4 marketing lineup including more [inflation] deal, 50% off boost week, and Emergency Pizza 2.0. Domino's Rewards continued to perform well, driving more light users and carryout customers.
• International Performance: Impacted by macroeconomic and geopolitical issues, resetting same store sales expectations to 1-2% for 2024-2025. Working with international master franchisees on renowned value strategies: aggressive promotional pricing, maximizing orders from aggregators, and diversifying beyond delivery to include carryout and dine-in.
• Financials: Income from operations increased 5.7% in Q3, excluding foreign currency impact of $1.4 million. Global retail sales grew 5.1% YTD, with US retail sales up 5.1% in Q3 driven by same store sales (3%) and carryout/delivery growth, and international retail sales up 5.1% YTD but impacted by market slowdowns.

US Business: Retail sales were up 6.6% through the first three quarters of 2024, with same store sales growing for the fourth consecutive quarter since launching the Hungry for MORE strategy, and positive order count growth for the fourth straight quarter. Domino's Rewards was a key driver of US comp performance in Q3, and the US system store count reached 6,930 with 24 net new stores in Q3. Retail sales contribution from US was significant. International Business: Retail sales were up 6.5% YTD, but below historical performance. Same store sales were up 0.8% in Q3 but saw a slowdown starting in August, impacted by macroeconomic pressures, geopolitical issues, and underperformance in Asia, Europe, and the Middle East. Revenue contribution from international was around half of global retail sales but less than a third of profits.

• Global net store growth guidance revised to 800-850 from previous 825-925, due to better visibility with DPE.
• Global retail sales growth expected to be ~6% in 2024, with operating profit growth ~8% excluding foreign currency. For 2025, global retail sales growth expected to be generally in line with 2024 expectations, while operating profit growth remains ~8% excluding FX.
• US same store sales expected to be 3% or more annually.
• International same store sales expected to be 1-2% for 2024-2025.

• Macro and geopolitical pressures impacting the overall industry and international business performance.
• Intense competitive environment around value in QSR pizza, which could affect margins.
• Softness in lower income customer spending and potential challenges in the delivery business.

Q: On unit growth update, explain moving parts and ability to ramp back targets A: Sandeep Reddy mentioned that the global net store growth guidance was updated to 800-850 from previous 825-925 due to better visibility with DPE, tightening the range and getting better understanding of fourth quarter expectations.

Q: On fourth quarter same store sales confidence A: Russell Weiner stated that he is excited about the Q4 lineup, including Emergency Pizza 2.0, pasta launch, and ongoing Domino's Rewards, with a strong marketing lineup set to drive growth.

Q: On international markets pressure points and unit growth trajectory A: Sandeep Reddy noted that same-store sales slowdown started in August, impacted by macro pressures in Europe and Asia, and global net store guidance adjustment was primarily due to DPE, with unit growth expectations in line with revised outlooks.