ANN ARBOR, Mich., March 30, 2020 /PRNewswire/ -- Domino's
Pizza, Inc. (NYSE: DPZ), the largest pizza company in the
world based on global retail sales, today announced
preliminary information from the first quarter in advance of its
first quarter earnings release on Thursday,
April 23, 2020, in light of the dynamic situation related to
the COVID-19 pandemic.
Statement from Ritch Allison,
Domino's Chief Executive Officer:
We don't typically provide a business update outside our normal
quarterly cadence, but we recognize that these are not normal
times. We pride ourselves on being transparent with our
stakeholders and we believe this information will be instructive,
given the unprecedented impact of COVID-19 on our business and the
restaurant industry.
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. 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.
As we manage through this challenge across the globe, I am proud
to say that we are prioritizing the health and well-being of our
team members, franchisees, and the communities we serve. We take
our responsibility seriously for continuing to provide convenient
and reliable delivery and carryout experiences to the communities
where those services have been deemed essential during this
extraordinary time.
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. 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.
Across the globe, Domino's will remain focused on execution,
service and value as we continue to navigate through the headwinds
created by COVID-19. We are carefully managing our balance sheet,
cash flow and all areas of the business to ensure we are doing what
we believe will help us best manage through the near-term and, as
always, position ourselves for long-term success.
We are also committed to supporting our teams and the
communities we serve. In our corporate stores and supply chain
centers, we have implemented enhanced sick pay policies and we will
provide additional compensation for our hourly team members during
this crisis. Our corporate stores and franchisees are also
hiring and are looking to add more than 10,000 employees across the
U.S. Here in the U.S. and around the world, we and our
franchisees are donating millions of pizzas to feed the need in our
communities.
I remain highly confident in our strategy and optimistic about
the opportunity and potential of our business. Our solid, resilient
business model and strong financial position will continue to serve
us well in these challenging times. I thank our franchisees across
the globe for their continued fight and passion in supporting their
store team members and customers during this difficult period. I
firmly believe that there is no system, no team and no brand better
equipped to face today's challenges than Domino's.
Preliminary Estimated First Quarter 2020 Sales
(Unaudited)
|
Period 1, 2020
(Dec 30, 2019 to
Jan 26, 2020)
|
Period 2, 2020
(Jan 27, 2020 to
Feb 23, 2020)
|
Period 3, 2020
(Feb 24, 2020 to
Mar 22, 2020)
|
First Quarter
of 2020
|
Same store sales
growth: (versus prior year
period)
|
|
|
|
|
U.S. Company-owned
stores
|
+4.0%
|
+2.6%
|
+5.0%
|
+3.9%
|
U.S. franchise
stores
|
+3.6%
|
+0.2%
|
+0.8%
|
+1.5%
|
U.S. stores
|
+3.6%
|
+0.3%
|
+1.0%
|
+1.6%
|
International stores
(excluding foreign
currency impact)
|
+2.3%
|
+2.4%
|
(0.2%)
|
+1.5%
|
|
|
|
|
|
Global retail
sales growth: (versus prior year
period)
|
|
|
|
|
U.S. stores
|
+7.1%
|
+3.6%
|
+4.2%
|
+4.9%
|
International
stores
|
+7.2%
|
+5.6%
|
(1.1%)
|
+3.9%
|
Total
|
+7.2%
|
+4.6%
|
+1.6%
|
+4.4%
|
|
|
|
|
|
Global retail
sales growth: (versus prior year
period,
excluding foreign currency impact)
|
|
|
|
|
U.S. stores
|
+7.1%
|
+3.6%
|
+4.2%
|
+4.9%
|
International
stores
|
+8.3%
|
+8.0%
|
+4.2%
|
+6.8%
|
Total
|
+7.7%
|
+5.8%
|
+4.2%
|
+5.9%
|
Update on International Market Closures Resulting from
COVID-19
There are currently 14 international markets closed and 23
international markets with partial store closures, representing
approximately 1,400 international stores that are temporarily
closed.
- France, Spain, New
Zealand and Panama
represent approximately 900 of these temporary store closures.
Preliminary Estimated First Quarter 2020 Store
Counts (Unaudited)
|
U.S. Company-
owned Stores
|
U.S. Franchise
Stores
|
Total
U.S. Stores
|
International
Stores
|
Total
|
Store
counts:
|
|
|
|
|
|
Store count at
December 29, 2019
|
342
|
5,784
|
6,126
|
10,894
|
17,020
|
Openings
|
4
|
31
|
35
|
143
|
178
|
Closings*†
|
(1)
|
(4)
|
(5)
|
(104)
|
(109)
|
Store count at March
22, 2020*
|
345
|
5,811
|
6,156
|
10,933
|
17,089
|
First quarter 2020 net
store growth
|
3
|
27
|
30
|
39
|
69
|
|
|
*
|
Temporary store
closures due to COVID-19 are not treated as store closures and
affected stores are included in the March 22, 2020 store
count.
|
†
|
Unrelated to
COVID-19, the South Africa market, reflecting 71 stores in total,
closed in the first quarter.
|
Liquidity and Use of Cash Update
Given the market uncertainty arising from COVID-19, subsequent
to the end of the first quarter, the Company took a precautionary
measure and borrowed the remaining availability of $158 million under its outstanding variable
funding notes to improve its already strong cash position. These
borrowings, along with the Company's estimated current unrestricted
cash as of the end of the first quarter, provide the Company with
more than $300 million in cash on
hand to provide enhanced financial flexibility.
Company Withdraws Fiscal 2020 Guidance
Due to the current uncertainty surrounding the global economy
and the Company's business operations considering COVID-19, the
Company is withdrawing its fiscal 2020 guidance measures related to
general and administrative expenses, capital expenditures, store
food basket pricing and the impact of foreign currency on royalty
revenues.
Comments on Regulation G
In this press release, the Company has included metrics such as
global retail sales growth, global retail sales growth, excluding
foreign currency impact and same store sales growth, which are
commonly used statistical measures in the quick-service restaurant
industry that are important to understanding Company
performance.
The Company uses "Same store sales growth," which is
calculated by including only sales from stores that also had sales
in the comparable period of the prior year. International same
store sales growth is calculated similarly to U.S. same store sales
growth. Changes in international same store sales are reported
excluding foreign currency impacts, which reflect changes in
international local currency sales.
The Company uses "Global retail sales" to refer
to total worldwide retail sales at Company-owned and franchise
stores. The Company believes global retail sales information is
useful in analyzing revenues because franchisees pay royalties and
advertising fees that are based on a percentage of franchise retail
sales. The Company reviews comparable industry global retail sales
information to assess business trends and to track the growth of
the Domino's Pizza® brand. In addition, supply
chain revenues are directly impacted by changes in franchise retail
sales. Retail sales for franchise stores are reported to the
Company by its franchisees and are not included in Company
revenues. "Global retail sales growth" is
calculated as the change of U.S. Dollar global retail sales
against the comparable period of the prior year. "Global
retail sales growth, excluding foreign currency impact" is
calculated as the change of international local currency global
retail sales against the comparable period of the prior year.
About Domino's Pizza®
Founded in 1960, Domino's Pizza is the largest pizza company in
the world based on retail sales, with a significant business in
both delivery and carryout pizza. It ranks among the world's top
public restaurant brands with a global enterprise of more than
17,000 stores in over 90 markets. Domino's had global retail sales
of over $14.3 billion in 2019, with
over $7.0 billion in the U.S. and
nearly $7.3 billion internationally.
In the fourth quarter of 2019, Domino's had global retail
sales of over $4.5 billion, with over
$2.2 billion in the U.S. and over
$2.3 billion internationally. Its
system is comprised of independent franchise owners who accounted
for 98% of Domino's stores as of the fourth quarter of 2019.
Emphasis on technology innovation helped Domino's achieve more than
half of all global retail sales in 2019 from digital channels,
primarily online ordering and mobile applications. In the U.S.,
Domino's generates over 65% of sales via digital channels and has
developed several innovative ordering platforms, including those
developed for Google Home, Facebook Messenger, Apple Watch, Amazon
Echo and Twitter – as well as Domino's Hotspots®, an
ordering platform featuring over 200,000 unique, non-traditional
delivery locations. In June 2019,
through an announced partnership with Nuro, Domino's furthered its
exploration and testing of autonomous pizza delivery. In late
2019, Domino's opened the Domino's Innovation Garage adjacent to
its headquarters in Ann Arbor,
Michigan, to fuel continued technology and operational
innovation – while also launching its GPS technology, allowing
customers to follow the progress of the delivery driver from store
to doorstep.
Order – dominos.com
AnyWare Ordering – anyware.dominos.com
Company Info – biz.dominos.com
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YouTube – youtube.com/dominos
Please visit our Investor Relations website at
biz.dominos.com to view news, announcements, investor
presentations, earnings releases and conference webcasts.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995:
This press release contains various forward-looking statements
about the Company within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Act") that are based on current
management expectations that involve substantial risks and
uncertainties which could cause actual results to differ materially
from the results expressed in, or implied by, these forward-looking
statements. The following cautionary statements are being made
pursuant to the provisions of the Act and with the intention of
obtaining the benefits of the "safe harbor" provisions of the Act.
You can identify forward-looking statements by the use of words
such as "anticipates," "believes," "could," "should," "estimates,"
"expects," "intends," "may," "will," "plans," "predicts,"
"projects," "seeks," "approximately," "potential," "outlook" and
similar terms and phrases that concern our strategy, plans or
intentions, including references to assumptions. These
forward-looking statements address various matters including
information concerning future results of operations and business
strategy, our anticipated profitability, estimates in same store
sales growth, the growth of our U.S. and international business,
ability to service our indebtedness, our future cash flows, our
operating performance, trends in our business and other
descriptions of future events reflect the Company's expectations
based upon currently available information and data. While we
believe these expectations and projections are based on reasonable
assumptions, such forward-looking statements are inherently subject
to risks, uncertainties and assumptions. Important factors that
could cause actual results to differ materially from our
expectations are more fully described in our filings with the
Securities and Exchange Commission, including under the section
headed "Risk Factors" in our Annual Report on
Form 10-K. Actual results may differ materially from
those expressed or implied in the forward-looking statements as a
result of various factors, including but not limited to: our
substantial increased indebtedness as a result of our
recapitalization transactions and our ability to incur additional
indebtedness or refinance or renegotiate key terms of that
indebtedness in the future; the impact a downgrade in our credit
rating may have on our business, financial condition and results of
operations; our future financial performance and our ability to pay
principal and interest on our indebtedness; the effectiveness of
our advertising, operations and promotional initiatives; the
strength of our brand, including our ability to compete in the U.S.
and internationally in our intensely competitive industry,
including the food service and food delivery markets; the impact of
social media and other consumer-oriented technologies on our
business, brand and reputation; new product, digital ordering and
concept developments by us, and other food-industry competitors;
the impact of new or improved technologies and alternative methods
of delivery on consumer behavior; our ability to maintain good
relationships with and attract new franchisees, and franchisees'
ability to successfully manage their operations without negatively
impacting our royalty payments and fees or our brand's reputation;
our ability to successfully implement cost-saving strategies; our
ability and that of our franchisees to successfully operate in the
current and future credit environment; changes in the level of
consumer spending given general economic conditions, including
interest rates, energy prices and consumer confidence; our ability
and that of our franchisees to open new restaurants and keep
existing restaurants in operation; changes in operating expenses
resulting from changes in prices of food (particularly cheese),
fuel and other commodity costs, labor, utilities, insurance,
employee benefits and other operating costs; the impact that
widespread illness, health epidemics or general health concerns,
severe weather conditions and natural disasters may have on our
business and the economies of the countries where we operate;
changes in foreign currency exchange rates; our ability to retain
or replace our executive officers and other key members of
management and our ability to adequately staff our stores and
supply chain centers with qualified personnel; our ability to find
and/or retain suitable real estate for our stores and supply chain
centers; changes in government legislation and regulations,
including changes in laws and regulations regarding information
privacy, payment methods consumer protection and social media;
adverse legal judgments or settlements; food-borne illness or
contamination of products; data breaches, power loss, technological
failures, user error or other cyber risks threatening us or our
franchisees; the effect of war, terrorism, catastrophic events or
climate change; our ability to pay dividends and repurchase shares;
changes in consumer preferences, spending and traffic patterns and
demographic trends; actions by activist investors; changes in
accounting policies; and adequacy of our insurance coverage. In
light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this press release might not
occur. All forward-looking statements speak only as of the date of
this press release and should be evaluated with an understanding of
their inherent uncertainty. Except as required under federal
securities laws and the rules and regulations of the Securities and
Exchange Commission, or other applicable law, we will not
undertake, and specifically disclaim, any obligation to publicly
update or revise any forward-looking statements to reflect events
or circumstances arising after the date of this press release,
whether as a result of new information, future events or otherwise.
You are cautioned not to place undue reliance on the
forward-looking statements included in this press release or that
may be made elsewhere from time to time by, or on behalf of, us.
All forward-looking statements attributable to us are expressly
qualified by these cautionary statements.
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SOURCE Domino's Pizza, Inc.