The Domino's Pizza Enterprises Ltd (ASX: DMP) share price will be on watch today after its U.S. parent released its quarterly update overnight.
What did Domino's US report?
The U.S. pizza giant had an underwhelming third quarter and fell short of the market's expectations. In its home market it reported a 1.7% increase in U.S. company-owned same store sales and a 2.5% lift in U.S. franchise same store sales. This compared to expectations for a 2.6% increase for both.
Outside the United States the company posted a 1.7% lift in international same-store sales. This was well short of the ~2.9% consensus estimate and could be a sign that the locally listed Domino's is underperforming.
Unfortunately, it doesn't look as though the U.S. Domino's is confident that there will be a material improvement in its performance overseas in the near future. It has downgraded its international same store sales growth target over the next 3-5 years from 3% to 6% growth, to 1% to 4% growth.
On its earnings call management explained why it has downgraded its growth targets.
It said: "Our updated international comp reflects longer than expected weakness in some of our markets, recognizing that we fallen below the previous outlook now for four consecutive quarters. And while some of this weakness is driven by the ongoing competitive pressures, I want to be clear that there are many opportunities for improvement that we and our master franchisees can influence. We are working alongside them every day through our centers of excellence, but these efforts are going to take some time to unfold."
Incidentally, the 3% to 6% growth in same store sales is what the locally listed Domino's is targeting over the same period.
Investors will no doubt be waiting to see if it also downgrades its same store sales growth target at its annual general meeting at the end of the month.
