Why This Pizza Stock Is Going Cold

Same-store sales at Domino’s Pizza slowed in the latest quarter amid increasing competition from delivery companies.


Photo:

Steven Senne/Associated Press

Investors are losing their appetite for

Domino’s Pizza
.

Shares fell 8.7% Tuesday, compared with the S&P 500’s 0.3% decline, after the Michigan-based pizza chain reported weaker-than-expected sales for the second quarter.

The figure that investors homed in on: same-store sales. They grew 3% in the U.S. in the quarter, almost a full 4 percentage points less than they did for the comparable period in 2018. The faltering momentum seemed to overshadow the broader trend for Domino’s, which said Tuesday that it has posted same-store sales growing in the U.S. for 33 consecutive quarters.

One possible culprit? Delivery apps. Domino’s, like rivals Papa John’s and Pizza Hut, has grappled with increasing competition from companies such as Postmates, Seamless and Uber Eats that have jumped into the food delivery business. The startups have been aggressive in advertising free or discounted delivery—something that Domino’s Chief Executive Ritch Allison said last quarter was particularly prominent during March Madness, the NCAA’s annual college basketball tournament.

It doesn’t seem like that problem abated much heading into the second half of the year.

“We haven’t seen any slowdown” in delivery companies’ discounting, Mr. Allison said on a conference call Tuesday.

Shares of rival

Papa John’s International

slid 3.4% Tuesday, while Pizza Hut parent Yum! Brands—which has a broader portfolio of companies, including Taco Bell and KFC—was down 0.4%.

Write to Akane Otani at akane.otani@wsj.com

Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

]

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

error: Content is protected !!