Domino's Pizza stock is falling: Why its Q2 results fell short

Domino's Pizza (DPZ) shares fell on Thursday after slightly missing same-store sales expectations in the second quarter and saying it's going to open fewer international stores than originally thought. On the earnings call, CEO Russell J. Weiner says order counts are growing, but that the environment is one where "folks are kind of struggling to decide what to buy."

Yahoo Finance senior reporter Brooke DiPalma breaks down the pizza chain's results in the video above, including catalysts for the company, such as its partnership with Uber Eats (UBER).

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This post was written by John Lesinski

Video Transcript

Domino shares falling today down a whopping 13%.

It's actually the number one ticker on the Yahoo Finance home page and this comes after the pizza giant modestly missed its same store sales expectations and cut its international unit guidance.

Yahoo Finance is Brook to Palma joins us now to discuss Brook, what the heck is going on here?

I'm the Domino's fan.

I like the flatbread cheesy crust pizza.

What's happening?

There's a lot going on here and investors are weighing in on that pullback and international growth guidance that's really driving that decline today.

And one analyst saying that investors are fearing that that pullback will then impact international sales growth in the near term over the next fiscal year and primarily with this pullback, one of their major franchisee operators, Domino's Pizza enterprising is closing under performing stores in Japan and France.

So is really weighing in on that.

But if you take a closer look at what's going on here in the US, when it comes to the state of the US consumer, we continue, we've been saying this over and over again.

We continue to see a very value conscious consumer one that is really doubling down on where they're going and where they're exactly putting their bucks on the call.

Ceo Russell Weiner weighed in on how the company is performing in this environment.

We've grown uh orders in our delivery business.

Our carry out business, every income cohort.

We, we haven't talked about international, but we've grown order count in, in international.

And so that's what's going on in an economy where folks are kind of maybe struggling to decide what to buy.

And really what we're seeing here is that value conscious consumer looking for the best bang for their buck.

But what would be a real indicator about how this pizza chain industry is doing is when Yum brands Pizza Hut comes out, we wanna hear from Papa John's earnings to see if this is really an overall trend or even these pizza chains that tend to do well in this environment where consumers are looking to get the best bang for the buck for their family is seeing a pull back as well.

So you were just saying how you were listening to the call?

What did management say about the path forward here?

Yeah.

Well, there's two incremental catalysts that the company is really looking at and that's their big partnership with Uber Eats.

They announced that last year and they have an exclusive deal with Uber Eats through Q one of next year.

So many investors are really hoping that they'll eventually go with other third party delivery services like a doordash Uber eats now make up 1.9% of total system wide sales.

That number is set to track to 3% by the end of the year.

Another catalyst here is loyalty.

We know that loyalty, the cater to this low income consumer that's really struggling right now.

Loyalty uh transactions are up two times a year over year.

And also customers are really responding well to that $5 offering to get points.

Domino's dropped that down from $10 to get points.

So really lower income consumers and income cohorts a like really playing into that loyalty options as well.

I love a good loyalty program getting r up those points.

Brook Dipalma.

Thank you so much for taking the time.