Domino's quarterly profit misses on higher COVID-19 costs

(Reuters) - Domino's Pizza Inc reported a smaller-than-expected profit on Thursday as high pandemic-related costs and staff bonuses offset a jump in demand for pizzas during the coronavirus crisis, sending the company's shares down about 8%. The world's largest pizza chain has thrived during the health crisis as diners staying at home craved more comfort food, but the growth has came at a cost as it spent about $11 million on hiring, bonuses, sick-pay policies and sanitary supplies

Reuters October 09, 2020 00:06:18 IST
Domino's quarterly profit misses on higher COVID-19 costs

COVID-19 costs" src="https://images.firstpost.com/wp-content/uploads/reuters/10-2020/09/2020-10-08T175159Z_1_LYNXMPEG971ZV_RTROPTP_2_DOMINOS-PIZZA-RESULTS.jpg" alt="Dominos quarterly profit misses on higher COVID19 costs" width="300" height="225" />

(Reuters) - Domino's Pizza Inc reported a smaller-than-expected profit on Thursday as high pandemic-related costs and staff bonuses offset a jump in demand for pizzas during the coronavirus crisis, sending the company's shares down about 8%.

The world's largest pizza chain has thrived during the health crisis as diners staying at home craved more comfort food, but the growth has came at a cost as it spent about $11 million on hiring, bonuses, sick-pay policies and sanitary supplies.

Chief Executive Officer Ritch Allison told analysts he expects elevated costs to continue during the pandemic, adding that international market growth continues to be challenging amid a slower pace of store additions.

General and administrative costs rose 9.5% to $91.7 million in the third quarter, the company said.

"The extent of margin pressure was surprisingly high," Bernstein analyst Sara Senatore said.

"While we believe this is the appropriate approach for long term worker heath and engagement, it did strip all of the upside."

Commodity costs also rose 3.8%, with the price of cheese, an important ingredient, hitting an all-time high in the reported quarter.

Sales at Domino's U.S. stores open for more than a year rose 17.5% in the third quarter ended Sept. 6, exceeding Wall Street estimates of 13.14%, helped by the resumption of sports leagues and more orders through delivery and takeout.

Domino's has been focusing on tech innovations and added wings, chicken tacos and cheeseburger pizzas to its menu in order to keep its customers from switching to rivals McDonald's, Papa John's and Pizza Hut.

On a per-share basis, Domino's earned $2.49 per share, compared with the expectation of $2.79, according to IBES data from Refinitiv.

Net income rose about 15% to $99.1 million. Total revenue rose 17.9% to $967.7 million, beating expectations of about $953 million.

(Reporting by Nivedita Balu in Bengaluru; Editing by Aditya Soni and Krishna Chandra Eluri)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.