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Domino's tops Q3 profit forecasts, but cuts sales guidance

(Sharecast News) - Shares in takeaway pizza chain Domino's rose on Thursday as investors focused on forecast-beating quarterly earnings and shrugged off a reduction to sales growth forecasts for the full year. Domino's said retail sales totalled $4.39bn for the third quarter, up from $4.22bn a year earlier, with both US and international store sales rising 5.1% year-on-year at constant exchange rates.

The Michigan-based company, which had more than 21,000 owned and franchised stores by the end of the period, reported revenues of $1.08bn when accounting for owned stores as well as franchise royalties and fees. That was also up 5.1% on last year though just shy of the $1.10bn consensus forecast.

Net income fell 0.5% to $146.9m due to higher income taxes, but diluted earnings per share were 0.2% higher at $4.19, comfortably beating the $3.64 expected by analysts.

Looking ahead, Domino's cut its global retail sales growth target from 7% to 6%, and cut its store openings projection from 825-925 to 800-850, citing a "challenging macroeconomic environment and its impact on current business trends across the globe".

Chief executive Russell Weiner said the company was operating within a "pressured global marketplace" during the third quarter, but added: "With the slate of initiatives we have in place, I am confident that we will continue to win and grow our market share across the globe for years to come."

After a brief stint in the red early on, the shares were up 2% at $421.31 by 1122 in New York.

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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