Shares of Domino's Pizza, Inc. (NYSE: DPZ) have disappointed investors in the past three months, underperforming the S&P 500 and its Industry. The company's struggle in international markets for opening and closing stores and high costs has significantly dented the stock.
In the past three months, Domino's stock has declined by 18% against the industry's 7.1% rise. In sharp contrast, the S&P 500 increased 6.2% during the same period. As of Aug 27, the stock closed at $418.41, significantly below its 52-week high of $542.75 but above its 52-week low of $330.05. The company also underperformed other industry players like McDonald's Corporation (NYSE: MCD), up 16.1%, Yum! Brands, Inc. (NYSE: YUM), down 0.1%, and Starbucks Corporation, up 28.3%, in the past three months.
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What's Hurting DPZ?
Domino's faced a notable setback in its international markets during the recent quarter, with global net new units significantly underperforming the company's and analysts' expectations. This underperformance was mainly caused by slower net growth in Japan and France, regions managed by one of Domino's key master franchisees.
DPZ had set its international unit targets based on agreements with its master franchisees, but the company observed that the number of new store openings and closures during the quarter diverged significantly from plans discussed after the first quarter. This unexpected decline raises concerns about the transparency and reliability of Domino's planning process. As a result, the company decided to suspend its guidance on future unit growth.
Inflationary pressures in commodity and labor costs continue to hurt the company. The industry players expect ...
