Domino’s Pizza announced another share buyback on Tuesday after reporting lower-than-expected quarterly earnings and same-store sales.
CFO Jeff Lawrence said on an earnings call that the pizza delivery giant would repurchase $1 billion shares, bringing total buybacks over the past three years to nearly $3 billion.
“On average over the last 12 months we have not only generated more than $1 million per day in free cash flow but when you add our share repurchases and dividends together we have also returned more than $1 million per day to our shareholders,” Lawrence said.
The announcement of the buyback came after Domino’s disappointed investors with another quarter of weak sales growth. Comparable sales at U.S. stores grew by 2.4% in the third quarter — the smallest gain since the second quarter of fiscal 2012.
Analysts expecting growth of 2.8% in the key retail sales metric.
The company earned $2.05 per share as net sales rose 4.4% to $820.8 million, missing estimates of earnings of $2.07 per share on revenue of $823.9 million.
“It was a good quarter for Domino’s as we continue to lean on our fundamental strength against a unique competitive environment,” CEO Ritch Allison said in a news release, citing strong unit growth and positive same-store sales.
Domino’s shares initially fell in morning trading Tuesday but rallied after the earnings call, rising 4.2% to $252.44
As CNBC reports, Domino’s has been facing growing competition from third-party delivery apps. Competitors such as Pizza Hut and Papa John’s have partnered with outside delivery networks but Domino’s is “betting that [the third-party] business model, which involves luring customers with free delivery and deep discounts, is not sustainable,” CNBC said.
Allison told investors on the conference call that there is a “significant shakeout coming to the industry.”
Domino’s also on Tuesday also announced a new outlook for the next two to three years, replacing its prior outlook for the next three to five years. It now expects sales growth in a range of 7% to 10% from a previous range of 8% to 12%.
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