Domino’s Pizza Inc (NYSE:DPZ) shares are trading lower after the company reported worse-than-expected second-quarter revenue performance.

The company reported second-quarter FY24 sales growth of 7.1% year-on-year to $1.097 billion, missing the analyst consensus estimate of $1.103 billion.

The revenue increase was primarily due to higher supply chain, U.S. franchise advertising and U.S. franchise royalties and fees revenues.

The growth in supply chain revenues was attributable to higher order volumes, as well as an increase in the company’s food basket pricing to stores, but was partially offset by a shift in the relative mix of the products sold by the company.

Global retail sales increased 7.2%, excluding the impact of foreign currency. Same-store sales in the U.S. grew 4.8%, while International same-store sales (excluding foreign currency impact) increased 2.1%.

The company had a global net store increase of 175 stores. Gross margin for the quarter expanded 30 basis points to 39.8%. Operating margin for the quarter contracted 120 basis points to 17.9%.

EPS of $4.03 beat the consensus estimate of $3.66.

Operating cash flow for the six months totaled $274.2 million, with a free cash flow of $230.5 million. Domino’s held $560.68 million in cash and equivalents as of June 16.

On July 16, the company’s Board of Directors declared a $1.51 per share quarterly dividend on its shares for shareholders of record as of September 13 to be paid on September 30.

In the two quarters of FY24, the company repurchased and retired 56,372 shares of common stock for a total of $25 million. As of June 16, it had a total remaining authorized amount for share repurchases of $1.12 billion.

“For the second straight quarter we drove U.S. comp performance in the healthiest way possible, through profitable order count growth. We had positive order counts in our delivery and carryout businesses, and across all income cohorts,” said CEO Russell Weiner.

Outlook: Domino’s continues to expect to achieve long-term guidance (2024 – 2028) metrics previously announced, with annual global retail sales growth of 7%+ and annual income from operations growth of 8%+.

The company is temporarily suspending its guidance metric of 1,100+ global net stores growth until the full effect of DPE’s store opens and closures on international net store growth are known.

Domino’s expects global net store growth of 825 to 925 in 2024.

Price Action: DPZ shares are trading lower by 10.2% at $425.00 in premarket at last check Thursday.

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