Domino's quarterly profit misses even as pandemic boosts pizza demand

·2-min read
A pizza comes out of the oven at Domino's Pizza restaurant in Los Angeles

Domino's quarterly profit misses even as pandemic boosts pizza demand

A pizza comes out of the oven at Domino's Pizza restaurant in Los Angeles

(Reuters) - Domino's Pizza Inc <DPZ.N> reported a smaller-than-expected profit on Thursday, as high COVID-19-related costs and staff bonuses offset a jump in demand for pizzas during the coronavirus crisis.

Shares of the Ann Arbor, Michigan-based company, which have risen about 47% this year, were down about 5% before the bell.

The world's largest pizza chain has thrived during the health crisis as diners staying at home craved more comfort food, but that came at a cost for the company, which spent millions on hiring more staff, bonuses, sick-pay policies and sanitary supplies.

Still, sales at Domino's U.S. stores open for more than a year rose 17.5% in the third quarter ended Sept. 6, exceeding Wall Street estimates of 13.14%, according to IBES data from Refinitiv.

The resumption of sports leagues such as the National Basketball Association and the National Hockey League has also boosted demand for pies and chicken wings.

Domino's has been focusing on tech innovations and has also broadened its menu with additions such as chicken tacos and cheeseburger pizzas in order to keep its customers from switching to rivals McDonald's <MCD.N>, Papa John's <PZZA.O> and Pizza Hut <YUM.N>, among others.

The company reported net income of $99.1 million, or $2.49 per share, compared with $86.4 million, or $2.05 per share, a year earlier.

Wall Street analysts had forecast earnings of $2.79 per share.

General and administrative costs rose 9.5% to $91.7 million. The pizza chain spent $108.1 million, a 20.8% rise, on advertising in the United States in the quarter.

Total revenue rose 17.9% to $967.7 million (746.74 million pounds), beating expectations of about $953 million (735.40 million pounds).

(Reporting by Nivedita Balu in Bengaluru; Editing by Aditya Soni and Krishna Chandra Eluri)