Shares of Domino's Pizza Inc. (DPZ) plunged nearly 10% on Monday after the company cut its 2026 comparable-sales forecast, citing sluggish consumer demand and intensifying competition in the value-oriented pizza market. The stock fell 9.8% to $331.89, erasing billions in market value despite the board's approval of a new $1 billion share repurchase program.
The Ann Arbor, Michigan-based pizza chain reported first-quarter results that disappointed Wall Street. U.S. same-store sales edged up just 0.9%, falling short of analyst expectations, while international same-store sales slipped 0.4%. Total revenue rose 3.5% to $1.15 billion, but net income dropped 6.6% to $139.8 million, with diluted earnings per share falling to $4.13 from $4.33 a year earlier.
Management now expects low single-digit comparable sales growth for both U.S. and international markets in 2026, a sharp downgrade from its prior guidance of 3% growth in the U.S. and 1% to 2% overseas. The revision reflects what CEO Russell Weiner described as an "intensifying macro and competitive environment," as rising costs for food, energy, and transportation continue to pressure lower-income consumers.
"We saw COVID-level lows in consumer sentiment," Weiner told analysts on the earnings call, pointing to inflation pressures, adverse weather, and aggressive discounting from national pizza rivals that nearly matched Domino's value offers. The company's value-focused deals, including the $9.99 "Best Deal Ever," "Mix and Match" offers, and the "Emergency Pizza" promotion, have been met with a wave of similar promotions from competitors.
The broader fast-food industry is experiencing a value war, with chains like McDonald's and Burger King also rolling out aggressive bargain menus to retain customers. However, for Domino's, the pressure is particularly acute given its reliance on value-conscious diners. "Food and energy costs are putting pressure on near-term earnings and could dent spending in the coming quarter or two," said Brian Mulberry, chief marketing strategist at Zacks Investment Management.
Despite the challenging environment, Domino's continued to expand its footprint, adding 180 net new stores in the quarter, including 19 in the U.S. and 161 internationally, bringing the total to 22,322 locations. Global retail sales reached $4.74 billion, up from $4.46 billion a year ago. The company also maintained its quarterly dividend at $1.99 per share, payable June 30 to shareholders of record as of June 15.
The board's approval of an additional $1 billion in share buybacks brings the total remaining authorization to $1.29 billion. However, the company noted that it can modify, suspend, or terminate the program at any time, leaving some investors skeptical about the long-term effectiveness of such measures. "The buyback leaves the core risks on the table," said independent retail consultant Bruce Winder. "If prices for fuel, groceries, and rent don't ease up, discounts might not do much to boost profitable traffic."
Domino's still targets 3% same-store sales growth in the U.S. for the current year, but Monday's sharp sell-off suggests that the market is focused on near-term headwinds. Investors now face a critical question: Can Domino's sustain its value strategy without sacrificing margins, or will the intensifying competition force deeper cuts that hurt profitability? For now, the market is voting with its feet.
