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Domino's CEO warns investors on Q1 sales outlook

Domino's advanced its own earnings release -- set for April 23 -- with some estimates showing sales growth is still anticipated by the world's largest pizza company. Still, CEO Ritch Allison cautioned the situation is changing daily.

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March 31, 2020 by S.A. Whitehead — Food Editor, Net World Media Group

Domino's Pizza Inc. withdrew its 2020 fiscal guidance late Monday, citing the impact of the COVID-19 pandemic, and also made the unusual move of providing some preliminary metrics ahead of its first quarter earnings.

The company said it temporarily closed 1,400 stores globally, while U.S. sales are suffering from fallout due to COVID-19. Exactly how great that impact will be this quarter remained to be fully quantified, according to the pre-earnings statement from Domino's CEO Ritch Allison. 

"As we continue to navigate this public health crisis, we have decided to provide you with this preliminary estimate of retail sales, same store sales, and store growth results from the first quarter of 2020," Allison said in the statement. "We have also decided to share some period-level detail to provide a view into how our results trended over the quarter. While we hope this is a helpful snapshot of the last 12 weeks, the situation remains fluid and we continue to assess the impact COVID-19 has had and will have on our business"

The company said it began seeing some sales decline internationally (down 0.2%) during the period from Feb. 24 to March 22, though U.S. sales during that period were up about 1%. In fact, the company estimated U.S. same-store sales would grow 1.6% for the quarter, while international sales would grow 1.5%. It also estimated global retail sales would climb 5.9% over the quarter excluding the impact of foreign currency.

But all of those estimates were provided with a healthy dose of caution from Allison, who again called attention to the volatility of the current situation in the U.S. and abroad due to the changing impact of COVID-19. 

"All but a handful of our U.S. stores have remained open and are serving customers. All U.S. supply chain centers are also open and fully operational. January U.S. sales were very similar to the fourth quarter of 2019," Allison said. "Beginning in February and ramping up into March, U.S. sales were impacted by many factors, which have varied in magnitude across the cities and towns we serve. Shelter in place directives, pantry loading, university and school closures, event cancellations, and the lack of live televised sports have all impacted our business in ways that we cannot yet fully quantify.

"Across our international business, the unique circumstances in a number of markets have necessitated the temporary closing of stores. We continue to stay in contact with the master franchise companies operating these affected stores and look forward to them reopening as soon as possible. China was our first market to be significantly impacted by COVID-19, and we were pleased to see our sales there recover and accelerate in the last few weeks of the first quarter."

Allison said corporate stores and supply chain centers for Domino's have implemented enhanced sick pay policies and the company is providing additional compensation for hourly team members during this crisis, though the specifics of that compensation were not provided.

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.