Domino’s, through its subsidiaries, operates as a global pizza company in three segments: U.S. Stores, International Franchise, and Supply Chain. Domino’s offers pizzas and other food products under the Domino’s brand name through Company-owned and franchised stores. The Company’s largest “master franchisee”-i.e., a franchisee that is charged with developing a geographical area and may profit by sub-franchising and selling food and equipment to those sub-franchisees-is Domino’s Pizza Enterprises (“DPE”). As of December 31, 2023, DPE operated 3,840 stores in 12 international markets, accounting for approximately 28% of the Company’s international store count and 19% of its global store count.
In December 2023, Domino’s hosted its 2023 Investor Day, during which Defendants provided new long-term guidance of “1,100+” annual global net store growth for the years 2024 to 2028.
The Complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) DPE, the Company’s largest master franchisee, was experiencing significant challenges with respect to both new store openings and closures of existing stores; (ii) as a result, Domino’s was unlikely to meet its own previously issued long-term guidance for annual global net store growth; (iii) accordingly, Domino’s business and/or financial prospects were overstated; and (iv) as a result, the Company’s public statements were materially false and misleading at all relevant times.
On July 18, 2024, Domino’s issued a press release announcing its Q2 2024 financial results. Among other items, Domino’s disclosed that it “expects it will fall 175 to 275 stores below its 2024 goal of 925+ net stores in international primarily as a result of challenges in both openings and closures being faced by Domino’s Pizza Enterprises (‘DPE’), one of its master franchisees.” Accordingly, “[t]he Company is temporarily suspending its guidance metric of 1,100+ global net stores until the full effect of DPE’s store opens and closures on international net store growth are known.” On an earnings call held that same day to discuss the Company’s Q2 2024 results (the “Q2 2024 Earnings Call”), the Company’s Chief Financial Officer Defendant Sandeep Reddy further revealed that the long-term guidance announced at the 2023 Investor Day did not accurately reflect the extent of DPE’s challenges with respect to new store openings and closures of existing stores.
On this news, Domino’s stock price fell $64.23 per share, or 13.57%, to close at $409.04 per share on July 18, 2024.
