Company News

UPDATE 2-Domino's profit beats as investments, promotions pay off

(Adds CEO quote from conference call, updates shares)

April 26 (Reuters) - Domino’s Pizza Inc beat Wall Street targets for profit and same-store sales on Thursday as promotional offers and investments to improve its ordering and delivery processes attracted more customers.

The biggest U.S. pizza delivery chain has for years been ahead of most fast-food rivals when it comes to investing in technology and leads the industry in digital ordering, customization and promotions.

Shares of the company gained as much as 9.2 percent to a record high of $255, adding to the near 24 percent increase this year.

“Our same-store sales performance (were) driven completely by order growth with more and more markets adopting promotional strategies and initiatives designed to grow transactions,” outgoing Chief Executive Patrick Doyle said on a call with analysts.

Doyle is stepping down as CEO in June after an eight-year stint that was marked by explosive share gains, fueled by initiatives such as improving the taste of the chain’s pizza and investing in online ordering.

Same-store sales at company-owned outlets in the United States rose 6.4 percent and franchise stores posted an 8.4 percent growth, both well above Wall Street expectations.

Analysts on average had expected same-store sales to rise 4.93 percent at company-owned U.S. stores and 5.63 percent at its franchise stores, according to Thomson Reuters I/B/E/S.

Comparable store sales in its international business rose 5 percent in the first-quarter ended March 25, beating the average analyst estimate of 4.1 percent.

The company offered promotions such as a buy one, get one during the U.S. college basketball season and discounted pizza prices for Valentine’s Day during the quarter.

Supply chain revenue, the money the company makes from supplying franchisees with ingredients and equipment, jumped 13.3 percent to $440.1 million. Royalty fees also rose.

Net income of $2.00 per share topped analysts’ estimate of $1.77.

Total revenue rose about 26 percent to $785.4 million. Analysts on average had forecast $691.9 million. (Reporting by Siddharth Cavale and Aishwarya Venugopal in Bengaluru Editing by Saumyadeb Chakrabarty and Sriraj Kalluvila)