Domino’s Pizza: reports dynamic situation due to Covid-19

Ann Arbor / MG. (dp) Domino’s Pizza Inc., the largest pizza company in the world based on global retail sales, announced preliminary information from the first eight weeks of the second quarter in advance of its second quarter earnings release on Thursday, July 16, 2020 in light of the dynamic situation related to the Covid-19 pandemic.

Chief Executive’s Statement

«Chief Executive Ritch Allison: Today we are providing a business update which includes preliminary sales results from the first eight weeks of the second quarter. We are doing so in the spirit of transparency, and due to the material increase in U.S. same store sales that we have experienced subsequent to our first quarter earnings release on April 23. Following today’s update, we intend to return to our normal quarterly reporting cadence, beginning with our full second quarter results in July.

«On behalf of our global Domino’s system of franchisees and corporate team members, we are absolutely privileged to have the opportunity to serve our customers and our communities with a convenient, affordable and safe food and service experience. We are humbled by, and will never take for granted, the trust that customers have placed in our brand and people. We appreciate it more than ever during these challenging times.

«Our U.S. sales results accelerated materially over weeks five through eight of the second quarter when compared to weeks one through four. We are seeing a tailwind as consumer behavior across the restaurant industry has shifted toward delivery and carryout, though we are not sure whether this trend will continue for the remainder of the second quarter or how long this tailwind may last. I am proud of the way the Domino’s system has responded rapidly to the Covid-19 environment, innovating across all aspects of our operations and our digital platforms to provide a contactless delivery and carryout experience, which is just one aspect of the unwavering commitment that we and our franchisees have to the safety of our customers and team members. We will continue to focus on providing our franchisees and stores with tools to remain operationally and financially healthy, and to provide a trusted, safe and affordable option for customers at a time when they need it most.

«Our international sales results continue to be choppy – and may be for the foreseeable future. In some markets, sales results are matching or exceeding those that we see in the U.S. In others, where our master franchisees are still experiencing significant operating limitations or temporary store closures, those sales are down materially versus last year. At our peak, we had approximately 2,400 temporary store closures. I am very encouraged to report that our master franchisees continue to reopen stores daily, as they take a safe but proactive approach to getting back to doing what they do best … servicing their customers. We expect that temporary closures, partial-week openings, abbreviated store hours and limited service methods will continue to pressure international same-store and retail sales in the near-term.

«In closing, I remain extremely proud of our global operators – from franchisees to general managers and store-level and supply chain center team members. Challenging circumstances always bring out the best in the Domino’s system and our Covid-19 response has been no exception. We will continue to be a “work in progress” brand, adapting to this new world, while maintaining our long-term emphasis on great-tasting pizza, value, service and technology. I look forward to updating you again during our second quarter earnings call in July.»

Preliminary Estimated Sales for the First Eight Weeks of Q2-2020 (Unaudited)

The table below outlines certain statistical measures utilized by the Company to analyze its performance. Refer to the Comments on Regulation G section for additional details.

Weeks 01 to 04 of Q2-2020 Weeks 05 to 08 of Q2-2020 Weeks 01 to 08 of Q2-2020
(2020-03-23 to 2020-04-19) (2020-04-20 to 2020-05-17) (2020-03-23 to 2020-05-17)
Same store sales growth: (versus prior year period)
U.S. Company-owned stores +10.5% +22.0% +16.2%
U.S. franchise stores +6.9% +20.9% +13.9%
U.S. stores +7.1% +20.9% +14.0%
International stores (excluding foreign currency impact) (1.1)% +3.3% +1.0%
Global retail sales growth: (versus prior year period)
U.S. stores +10.7% +25.0% +17.8%
International stores (16.6)% (6.6)% (11.6)%
Total (3.1)% +9.0% +2.9%
Global retail sales growth: (versus prior year period, excluding foreign currency impact)
U.S. stores +10.7% +25.0% +17.8%
International stores (10.9)% (1.4)% (6.2)%
Total (0.2)% +11.6% +5.7%


Update on International Market Closures Resulting from Covid-19

As of May 24, 2020, nearly all of the Company’s U.S. stores remain open, with dining rooms closed and stores deploying contactless delivery and carryout solutions. Based on information reported to the Company by its master franchisees, the Company estimates that as of May 24, 2020, there are less than 900 international stores that are temporarily closed.

Liquidity and Use of Cash Update

As previously disclosed, given the market uncertainty arising from Covid-19, the Company took a precautionary measure and borrowed the remaining availability of USD 158.0 million under its outstanding variable funding notes during the second quarter of 2020. The Company has since repaid USD 100.0 million of these borrowings. To date, the Company has continued to generate positive operating cash flow and currently has nearly USD 250.0 million of cash on hand to provide ongoing financial flexibility. Subsequent to the repayment, the Company currently has USD 102.0 million of available borrowings under its USD 200.0 million variable funding notes, net of letters of credit issued of USD 40.0 million.

Future Business Updates

The Company expects to continue its traditional quarterly reporting going forward and does not intend to issue further intra-quarter business updates related to the Covid-19 pandemic.