Domino's Shares Rebound Despite Sales-Growth Warning

By Jessica Menton 

Domino's Pizza delivered a blow to pizza stocks Tuesday, then didn't stick around for a slice of the aftermath.

Shares of the world's largest pizza company slid as much as 6.1% in early trading after a weaker-than-expected earnings report. Papa John's International slumped 3.1% while Pizza Hut parent Yum Brands fell 0.6%.

Buffeted by increased competition from food-delivery services such as Grubhub, DoorDash and Uber Eats, the pizza chain said it expects U.S. same-store sales to grow between 2% and 5% over the next two to three years. That is down from prior projections for an increase of 3% to 6% over three to five years.

But Domino's stock turned 4.8% higher after Chief Executive Ritch Allison tried to ease investors' concerns about the long-term outlook and the company announced it would repurchase $1 billion in shares.

"The reality is that we don't have visibility into exactly how long some of these new entrants into the quick-service delivery segment are going to benefit from the financial support of aggregators who are seeking to buy market share," Mr. Allison said during the earnings call with shareholders Tuesday.

Domino's shares have largely underperformed the broader market this year. The stock has risen 2.4% in 2019, compared with the S&P 500's 16% climb.

(END) Dow Jones Newswires

October 08, 2019 15:36 ET (19:36 GMT)

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