Domino’s Pizza (DPZ) Misses Fourth Quarter 2021 Results, CEO Ritch Allison Retires

An employee carries an order for a customer at a Domino’s Pizza restaurant in Detroit.

Sean Procter | Bloomberg | Getty Images

Domino’s Pizza on Tuesday announced a C-suite shakeup and quarterly results that fell short of expectations on most metrics, sending the stock down sharply.

The pizza chain posted fourth-quarter profits and revenue below analysts’ expectations and also announced that CEO Ritch Allison plans to retire. Chief Operating Officer and U.S. President Russell Weiner will succeed him at the helm of the company, effective May 1.

Shares of the company were down about 8% in morning trading.

Here’s what the company reported for the quarter ended Jan. 2 compared to what Wall Street expected, based on a Refinitiv analyst survey:

  • Earnings per share: $4.25 vs $4.28 expected
  • Income: $1.34 billion vs $1.38 billion expected

The pizza chain reported fourth-quarter net income of $155.7 million, or $4.25 per share, from $151.9 million, or $3.85 per share, a year earlier. Analysts polled by Refinitiv had expected earnings per share of $4.28.

Net sales fell 1% to $1.34 billion, missing expectations of $1.38 billion. The company said currency fluctuations, an extra week in 2020 and advertising incentives from promotions contributed to lower fourth-quarter revenue.

U.S. same-store sales were up just 1% in the quarter, driven by weak performance from Domino’s-owned restaurants. Analysts had expected U.S. same-store sales growth of 2.9%, according to StreetAccount estimates.

After demand for Domino’s pizza and wings soared at the start of the pandemic, the company faced tough year-over-year comparisons. He also had to reckon with a labor shortage that led to reduced working hours for some US sites.

Outside the United States, the channel’s performance also disappointed. International same-store sales increased 1.8% in the quarter, below StreetAccount’s estimate of 6.6%.

The company added 468 net new locations during the quarter. More than 80% of these new restaurants are located outside the United States

In January, the company reiterated its two- to three-year outlook for global retail sales growth of between 6% and 10% and unit net growth of between 6% and 8%.

The chain does not provide quarterly or annual earnings forecasts, but it said it expects ingredient costs to rise 8% to 10% in 2022, about three to four times inflation for a normal year.

The upheaval of management

After stepping down as CEO, Allison will continue to serve as an advisor until July 15, when he will officially retire. He plans to remain on the company’s board until the April 26 annual meeting of shareholders. Allison has served as CEO of the pizza chain since July 2018.

His successor, Weiner, has worked for Domino’s since 2008, when he helped launch the company’s turnaround plan as chief marketing officer. He has served as Chief Operating Officer and President of the United States since July 2020.

The company also announced that it has hired Sandeep Reddy as its next chief financial officer, effective April 1. Reddy is currently Six Flags’ chief financial officer, although he announced on Monday that he would step down on March 27. Prior to Six Flags, he served in the same role for Guess. Domino’s former chief financial officer, Stu Levy, resigned in May after less than a year on the job.

“With Russell as CEO and with the addition of Sandeep as CFO, supported by the rest of our management team, I am comfortable and confident to step down knowing that Domino’s has strong leaders who are passionate and committed to our business,” Allison said in a statement.

Fix: Domino net sales fell 1% in the fourth quarter of 2021. A previous release misrepresented the year-over-year change.

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