Domino's Pizza stock tumbled early Thursday after missing sales estimates and announcing that its international growth plans stalled. Elsewhere, restaurant brand operator Darden late Wednesday announced it entered an agreement to buy Tex-Mex chain Chuy's for $605 million. CHUY stock vaulted on the news.
Domino's Pizza early Thursday reported a 31% earnings increase to $4.03 per share in its second quarter. Earnings were well above FactSet estimates of $3.68 per share. Total revenue rose 7.1% to $1.098 billion, but stopped just short of forecasts for $1.1 billion.
Ann Arbor, Mich.-based Domino's maintained its long-term guidance of 7% or more annual global retail sales growth from 2024 to 2028. It kept its guidance of 8% or more annual income growth from operations.
However, Domino's international growth plan appears to have stalled. The company said it will fall 175 to 275 stores short of its 2024 goal for 925 net international locations and temporarily suspended its guidance of opening more than 1,100 global net stores. The announcement comes after Domino's Pizza Enterprises, its Australia-based master franchise, on Wednesday announced plans to shutter 80 low-volume stores in Japan and 10 to 20 locations in France. Still, the expects to return to positive same-store sales growth in Japan in fiscal 2025 and forecasts 3% to 4% comparable sales growth in fiscal 2026, Reuters reported.
Domino's reported U.S. same store sales rose 4.8% for the quarter. International sales growth slowed year over year to a 2.1% increase.
Domino's Stock
Domino's stock unraveled 14.3% early Thursday, dropping to its lowest level since February. DPZ stock has trended lower since late June and fell below its 50-day moving average at the start of July.
The stock on Wednesday made this month's second test of a low from late April. Finding support at that level may have marked the bottom of the current consolidation. But Thursday's early action pushed it to a much deeper break below that support as shares fell below their 200-day moving average.
The stock has not undercut 200-day support since November.
Darden, Chuy's Deal
Darden Restaurants, the operator of restaurant brands including Olive Garden, LongHorn Steakhouse and Ruth's Chris Steak House, on Thursday expanded its portfolio with a $605 million deal to buy Tex-Mex chain Chuy's.
The company agreed to acquire the outstanding shares of Chuy's for $37.50 per share in an all-cash transaction. The $37.50 purchase price represents a 40% premium to Chuy's 60-day volume-weighted average price, Darden said. CHUY stock closed at 25.27 on Wednesday prior to the announcement.
Darden expects the deal to be neutral on its 2025 earnings per share, but boost its 2027 earnings by 12 to 15 cents. And Darden expects to achieve pretax synergies of $15 million by the end of fiscal 2026.
Both company boards unanimously approved the deal, which is expected to close in Darden's second quarter subject to customary closing conditions. However, the agreement includes a 30-day "go shop" period that allows Chuy's to solicit alternate offers from interested parties.
CHUY stock vaulted 47% early Thursday on the announcement. Shares have been in a long-term downtrend stretching back to February.
Chuy's tumbled 33.9% this year through Wednesday.
DRI eased modestly Thursday morning. Darden shares jumped the past five trading days to bounce back near their 50-day moving average.
Darden had carved 10.3% lower in 2024 as of Wednesday's close.
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