Ann Arbor, Michigan-based Domino’s Pizza, Inc (DPZ), which currently owns and operates 454 company-owned restaurants and 8,897 franchised restaurants, announced the opening of its first store in Poland, which is Europe’s sixth largest economy.
The company has opened the new pizza store through a franchise DP Polska SA, who is the master franchisee for Poland and is owned by DP Poland plc.
Located in the Mokotow district of Warsaw, the new store will be able to easily drive traffic as the area has a high residential population density along with a vibrant commercial population.
We believe with the opening of the first store in Poland, the company will be able to boost its international market share. During the fourth quarter of 2010, Domino’s opened 171 restaurants in the international market. The company derives half of its global retail sales from international markets.
The company remains optimistic on its international operations both in terms of sales and store growth and seeks to open stores in new markets. Domino’s operates as a pizza delivery company in the United States and in over 65 international markets. The company remains committed to opening 10,000 stores worldwide.
Over the long term, the company expects domestic same-store sales to grow in the range of 1% to 3%, international same-store sales to be up 3% to 5% and global retail sales to jump 4% to 7%.
We have a Zacks #3 Rank (short-term Hold recommendation) on the shares, given the company’s higher same-store sales, strong cash position and expansion in international markets. However, we remain cautious on the stock based on cost inflation and competition from peers such as Papa John’s International Inc. (PZZA) and California Pizza Kitchen Inc. (CPKI). We also reiterate our long-term Neutral recommendation.
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