Domino’s earnings miss expectations as pizza chain cites tough labor market, higher costs

Domino's Pizza reported mixed quarterly results as it struggled with higher costs and an ongoing shortage of delivery drivers.

Food costs and foreign currency exchange rates are expected to drag down international revenue more than previously anticipated.

Domino's shares were down 3% before the market opened.

Here is what the company reported compared with what Wall Street was expecting.

• Earnings per share: $2.82 vs. $2.91 expected
• Revenue: $1.07 billion vs. $1.05 billion expected

The three-month period ended June 19 had net income of $102 million, or $2.82 per share, down from $118.6 million, or $3.06 per share, a year earlier.

The CEO said that the company continued to navigate a difficult labor market, especially for delivery drivers, in addition to inflationary pressures.

Net sales increased by 3.0% Domino's said the increase in sales was due to higher food costs. Operators paid more this quarter than last.

Same-store sales were down at home and abroad. In the U.S., same-store sales fell as it faced tough comparisons in the year-ago period, which was boosted by the economic recovery and people ordering more pizza at home.

Domestic same-store sales were expected to grow by 5%.

International same-store sales were down by 2%. Domino's said a tax holiday in the United Kingdom drove sales higher a year ago, but it didn't happen this year. Same-store sales growth for the international unit was expected to be flat.

Most of the new stores opened this quarter were overseas.

Domino's is now expecting food basket prices to go up by up to 15%, up from its previous forecast of 10% to 12%. The company said that foreign currency exchange rates will affect its revenue by up to $26 million, up from its previous prediction of $12 million to $16 million.

You can read the full report here.