ANN ARBOR, Mich. (
beat Wall Street's top- and bottom-line expectations for its second quarter, growing profits by 55.9% year-over-year.
Investors, however, hungered for more. Shares of Domino's, or slices of its proverbial pie, fell 2.2% in afternoon trading Tuesday. Shares of
Buffalo Wild Wings
, fellow food chains due to report quarterly financials Tuesday, were 1.6% lower and 1.4% higher, respectively.
Domino's said it grew comps, or sales at stores open at least one year, by 8.8% last quarter while analysts expected the key metric to come in around 10%, disappointing shareholders. The pizza delivery chain's shares were up nearly 60% year-to-date, Oppenheimer analyst Matthew J. DiFrisco told
, which also helps to explain Tuesday's stock price decline in light of the earnings beat. "There was some profit taking there," he said.
Concerns about whether Domino's could maintain comps growth throughout 2010 were somewhat abated when, on a conference call with investors, Domino's executives reiterated sentiments that momentum was continuing into the third quarter with repeat customers. The company said its level of sustainability should be above its historical norms of low to mid-single-digit same-store-sales trends. DiFrisco expects Domino's to post mid- to high-single digit comps for 2010.
Buffalo Wild Wings recently cited a drag on its overall same-store sales figures for newer stores that saw big initial volumes after opening only to then see traffic fall at a rate that dragged overall company-wide comps figures. DiFrisco expects the Minneapolis-based company to say comps grew 1.5% in the recent quarter.
DiFrisco pointed out that Buffalo Wild's stock price grew in early June, the days leading up to the FIFA World Cup, on anticipated revenues generated by hungry soccer fans. But now investors want to see sequential improvements from the prior quarter, he said, since the wing and beer purveyor is still vulnerable to the headwinds of increased happy hour discounts in the second quarter.
Panera Bread is expected to report comps growth of 9% with high expectations for top-line growth. If the Richmond Heights, Mo.-based bakery chain manages to beat that estimate it could outpace sector leader
Chipotle Mexican Grill
, at least in terms of same-store sales gains.
The burrito chain said last week it
grew comps 8.7% year-over-year
. Chipotle's numbers were especially strong in comparison to other fast-casual chains that reported last week.
grew comps 5.3% year-over-year,
The Cheesecake Factory
was up 1.6% and
managed just 0.3%.
Investors expect Buffalo Wild to earn 42 cents per share, while Panera should book profits of 84 cents per share. Recent price increases should help Buffalo's reported margins, DiFrisco said, but investors should look more closely at quarter-to-date trends than what happened last quarter.
For the recent quarter Domino's booked net profits of $22.6 million, or 37 cents per share, in the recent quarter, up from $14.5 million, or 25 cents per share, in the year-earlier period, attributed to improved margins, lower interest expenses and a lower tax rate. Excluding one-item items, profits were 33 cents per share, easily beating expectations for earnings of 28 cents.
Revenues grew 14.5% to $362.4 million thanks to higher volumes and improved global comps.
CEO J. Patrick Doyle stressed that increased sales "were not just driven by trial, but by repeat orders from our new larger customer base," lured by the company's recently launched new pizza recipe.
-- Reported by Miriam Marcus Reimer from New York.
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