Domino’s Pizza Inc. in Ann Arbor today announced preliminary information from the first quarter in advance of its earnings release on Thursday, April 23 in light of the situation related to the COVID-19 pandemic.
Given the market uncertainty arising from COVID-19, subsequent to the end of the first quarter, the company took a precautionary measure and borrowed the remaining availability of $158 million under its outstanding variable funding notes to improve its cash position. The borrowings, along with the company’s estimated current unrestricted cash as of the end of the first quarter, provide the company with more than $300 million in cash on hand to provide enhanced financial flexibility.
The company has also withdrawn its fiscal 2020 guidance measures related to general and administrative expenses, capital expenditures, store food basket pricing, and the impact of foreign currency on royalty revenues.
“I remain highly confident in our strategy and optimistic about the opportunity and potential of our business,” says Ritch Allison, CEO of Domino’s. “Our solid, resilient business model and strong financial position will continue to serve us well in these challenging times. I thank our franchisees across the globe for their continued fight and passion in supporting their store team members and customers during this difficult period.”
The company says it is prioritizing the health and well-being of its team members, franchisees, and communities. It continues to provide delivery and carryout orders.
All but a handful of its U.S. stores remain open, and all U.S. supply chain centers are open and fully operations. January U.S. sales were similar to the fourth quarter of 2019. Beginning in February and ramping up into March, U.S. sales were impacted by many factors, which have varied in magnitude across the cities and towns they serve. Shelter in place directives, pantry loading, university and school closures, event cancellations, and the lack of live televised sports have impacted the business in ways that are not yet quantifiable.
Across the international business, unique circumstances in a number of markets necessitated the temporary closing of stores. Domino’s is staying in contact with the master franchise companies operating the locations and will reopen them as soon as possible. China, the first market to be impacted by COVID-19, has seen sales recover and accelerate in the last few weeks of the first quarter.
Domino’s says it will remain focused on execution, service, and value as it continues to navigate through the headwinds created by COVID-19. It is managing its balance sheet, cash flow, and all areas of business to ensure the company is doing what it believes will help it best manage through the near-term and position itself for long-term success.
The company has implemented enhanced sick pay policies and will provide additional compensation for its hourly team members during the crisis. Its corporate stores and franchisees are also hiring and looking to add more than 10,000 employees across the U.S. It is donating millions of pizzas to feed those in need around the world.
Domino’s was founded in 1960 and is the largest pizza company in the world based on retail sales.