UPDATE 1-Domino's beats revenue estimates on supply chain business strength

Domino's Pizza, Inc.

Domino's Pizza, Inc.

DPZ

0.00

Adds shares in paragraph 6, details in paragraph 7-11

- Domino's Pizza's DPZ.O quarterly revenue edged past Wall Street estimates on Monday as growth in its supply-chain business offset softer demand at its restaurants, where cautious consumers curbed discretionary spending.

Shares of the company, which had fallen about 23% this year, were up about 7% in premarket trading.

The Ann Arbor, Michigan-based company's second-quarter revenue of $1.19 billion edged past estimates of $1.18 billion, helped by a 6.5% rise in quarterly supply-chain revenue to $731.7 million.

Its supply-chain revenue rose on higher order volumes from stores and a 2.2% increase in food-basket pricing, reflecting modest inflation in the ingredients and supplies it sells to franchisees.

"I believe order growth is the most important driver of long-term success in our business," Domino's retiring CEO Russell Weiner said in a statement.

Same-store sales in the U.S., however, rose only 0.1% for the quarter ended June 14, short of analysts' estimates for a 0.62% rise, according to data compiled by LSEG. Sales rose 3.4% a year ago.

The pizza chain's quarterly sales growth has slowed for the past few quarters as fears of higher living costs and a sluggish job market in the U.S. discouraged consumers from splurging on discretionary purchases, including dining out.

Weiner added that the broader U.S. quick-service restaurant industry remains under pressure, echoing his April warning that consumer sentiment had fallen to COVID-19-era lows in March as inflation weighed on spending decisions.

Its quarterly cost of sales rose 4.7% to $716.2 million from a year ago.

Domino's quarterly profit came in at $4.07 per share, below estimates of $4.17 per share, as cost of sales rose.