- US Retail Sales Growth: +7% driven by same-store sales acceleration to 5.2%, fueled by "Best Deal Ever" promotion and Parmesan Stuffed Crust.
- Income from Operations Increase: +11.8% (excluding foreign currency), driven by higher US franchise royalties and supply chain margin growth.
- Store Expansion: 29 net new US stores added, bringing total to 7,090 units, with 7,700 U.S. unit target by 2028.
- Share Repurchase Activity: $75M spent on 166,000 shares at an average price of $450/share in Q3.
- Debt Refinancing: $1.15B in new debt at a blended rate of 4.3%, refinancing debt due in October 2025.
Operational Highlights
The "Best Deal Ever" promotion was a significant driver of the US results, alongside the success of Parmesan stuffed crust pizza. The company added 29 net new stores in the US, bringing the total to 7,090. The outlook for 2025 remains unchanged, with expected global retail sales growth in line with 2024. The US comp is expected to be 3%, and international same-store sales growth is expected to be 1% to 2%. The company continues to expect operating income growth of approximately 8%, excluding the impact of foreign currency.
Growth Initiatives
Domino's is confident in delivering 3% comps in 2026, driven by innovations like aggregators, stuffed crust, and loyalty programs, which are expected to contribute to growth. The company has a history of launching products that can build over time, rather than limited-time offers. The US unit development target is 7,700 units by 2028, with a long-term target of 8,500 units. Management feels bullish about the target, citing the company's history of gaining share and competitors' stores closing.
Valuation
With a P/E Ratio of 24.02 and an EV/EBITDA of 18.43, the market seems to be pricing in a certain level of growth for Domino's Pizza. Analysts estimate next year's revenue growth at 6.8%. The company's ROIC is an impressive 59.33%, indicating a strong ability to generate returns on invested capital. However, the ROE is negative at -14.91%, which may be a concern. The Net Debt / EBITDA ratio is 4.65, indicating a manageable level of debt.
Outlook
The company is seeing a slowing across restaurant industry sales to start the fourth quarter, but remains confident in its ability to gain share against the QSR pizza industry. The "Best Deal Ever" promotion and the impact of DoorDash are expected to continue into Q4. Management believes its renowned value and ability to price for profitability will enable it to succeed in a competitive delivery market. If the macro environment worsens, Domino's 4Q comp growth could be below 3%. However, management believes short-term category pressure leads to long-term opportunity for the company.