Domino’s Pizza reported same-store sales growth of 5.6% for the fourth quarter, falling short of analyst expectations. Analysts had expected same-store growth of 6.9%.

The company’s share price, which had soared over the past year, fell more than 9% on Thursday morning on the news.

Domino’s opened a net 560 stores in the fourth quarter. Last year, it surpassed 10,000 locations outside the United States as part of a “fortressing” strategy that allows drivers to decrease delivery times and earn more tips.

“The softer than expected domestic comps could partially reflect an accelerated impact from fortressing as the company opened 125 domestic locations on a net basis in 4Q (+5.7%), in excess of our estimate for 106 net openings and Consensus Metrix’s 101,” said Andrew Charles, an analyst at Cowen, in a research note.

Domino’s reported it had fourth quarter net income of $111.6 million, or $2.62 per share. The FactSet consensus was for EPS of $2.69 and revenue of $1.10 billion. Earnings a year ago were $93.3 million, or $2.09 per share. It reported net sales of $1.08 billion, up 21%, but still missed analyst estimates for net sales, which had been $1.10 billion.

The company said the increase in net income was due to paying a lower tax rate following tax cuts in 2017.

Domino’s said it expected global retail sales growth of 8% to 12% over the next three to five years, reaffirming its outlook. It said it expected U.S. same-store sales growth of 3% to 6%. The company does not release forecasts for quarterly or annual earnings.

The company’s shares are up 20.8% over the past year.

Domino’s also announced that it was raising its quarterly dividend to 65 cents, an 18% increase.

“I am pleased with our fourth quarter, which capped a very strong 2018 for Domino’s,” CEO Ritch Allison said in a statement. “Our long-game approach, driven by fundamentals and the finest franchisee base in QSR across the globe, continues to pace the industry – and we are excited to execute our global strategy in 2019 and beyond.”

 

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