Domino's Sales Decline

Domino's DPZ beat third-quarter profit estimates but missed on the top line as domestic same-store sales fell 3%.

The Ann Arbor, Mich., pizza delivery franchiser made $25 million, or 39 cents a share, for the third quarter ended Sept. 10, up from the year-ago $20 millon, or 30 cents a share. Sales fell to $327 million from $338 million a year earlier.

Analysts surveyed by Thomson Financial were looking for a 35-cent profit on $339 million in sales.

Domestic same -store sales were weakened by lighter consumer traffic, the company said, but international same-store sales grew 3% from the prior-year period.

Distribution revenue decreased 3.6% because of lower food prices, primarily cheese, and lower volumes due to a decrease in domestic franchise same-store sales. The average cheese block price per pound was $1.19 in the third quarter of 2006, down 19.6% from $1.48 in the third quarter of 2005. Revenue from international operations decreased 8.4%, due primarily to the sale of company-owned operations in France and the Netherlands to an existing master franchisee.

"Our domestic business operated in a significantly weaker sales environment than expected," said CEO David Brandon. "We experienced negative traffic counts for most of the quarter and we did not achieve consistent positive sales results across our domestic system of stores."