Domino’s Pizza Inc. (DPZ) reported third quarter 2010 adjusted earnings of 27 cents per share, which inched past the Zacks Consensus Estimate by 2 cents. The company had earned 17 cents in the year-earlier quarter. The increase can mainly be credited to strong sales combined with lesser interest expense and a lower effective tax rate.

Total revenue in the reported quarter increased 14.8% year over year to $347.4 million and comfortably surpassed the Zacks Consensus Estimate of $334.0 million. The growth was mainly volume-driven. In addition, overall revenue benefited from higher same-store sales both within the U.S. and oversees as well as store count growth in international markets.

The company’s overall domestic same-store sales registered robust growth of 11.7% with company-owned units increasing 11.8% and franchises stepping up 11.8%. The improvement was aided by reformulated pizza and the effectiveness of its advertising. In the comparable period last fiscal year, Domino’s had noticed flat domestic same-store sales growth. Same-store sales growth in the international market was 7.0% versus 2.7% in the third quarter of 2009. Global Retail Sales were up 12.5% in the third quarter, or up 12.1% excluding foreign currency impact.

The operating margin at Domino’s plunged 40 basis points (bps) to 27.1% in the reported quarter. However, in proportion to sales, selling, general and administrative expenses dropped 90 bps.

Store Count

During the third quarter, Domino’s opened 12 domestic franchise stores and closed 16, bringing the total number to 4,450. At quarter end, the company had 455 company-owned restaurants in the domestic market while its international store count was 4,264 with 78 openings and 2 closings.

The company remains optimistic on its international operations both in terms of sales and store growth and seeks to open stores in new markets along with existing ones. Domino’s Pizza remains committed to its drive to open 10,000 stores worldwide.

Financials

At quarter end, Domino’s Pizza had cash and cash equivalents of $116.7 million with long-term debt of $1,474.9 million.

 
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