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Why Domino’s Pizza’s stock is plunging — and what it means for its CEO

Domino’s Pizza is shaking up its leadership after the company announced that it failed to meet its earnings goals — prompting the share price to drop some 8% on Tuesday. Domino’s CEO Ritch Allison will retire effective May 1 and he will be replaced by COO Russell Weiner, the company announced on Tuesday. The Ann Arbor, Michigan-based pizza chain reported disappointing results from the fourth quarter of last fiscal year that ended on Jan. 2. Domino’s generated a net income of $155.7 million, or $4.25 per share, up from $151.9 million a year earlier. But the result falls short of analyst expectations of $4.28 earnings per share. Net sales fell 1% to $1.34 billion — which was short of the $1.38 billion that analysts expected. The company’s earnings suffered due to lower-than-anticipated same-store sales, which rose just 1% in the quarter, according to CNBC. Analysts were expecting same-store sales growth of 2.9%. Domino’s, like other companies, has had to deal with the fallout from disruptions in the labor market as well as falling demand. While sales soared during the early days of the pandemic, consumers started to move away from at-home deliveries as the mass vaccination drive led to the lifting of lockdown measures. Domino’s, like virtually all businesses in many sectors of the economy, has also had to raise prices due to “unprecedented increases” in the cost of food and other key ingredients. Domino’s international sales also did not meet key metrics. The same-store sales rose just 1.8% in the quarter — well short of analyst expectations of 6.6%. Earlier this year, Domino’s tried to drum up sales by offering customers a $3 “tip” as incentive to pick up their pizza rather than having it delivered. The move was designed to alleviate a labor shortage plaguing the company.

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