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Domino’s Pizza backs long-term sales outlook despite higher food costs

A Domino’s employee preparing a pizza.

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Domino’s Pizza reaffirmed its long-term outlook on Tuesday, as it enters fiscal 2020 facing headwinds from higher food costs, foreign exchange and competition from third-party delivery services. 

Shares of Domino’s, which has a market value of $11.7 billion, were trading up less than 1% in afternoon trading.

In October, the pizza chain released a two-to-three year outlook that replaced its prior forecast for three to five years. Domino’s told investors to expect U.S. same-store sales growth in a range of 2% to 5% and global retail sales growth of 7% to 10%.

The rise of Postmates, DoorDash and other delivery services have put pressure on Domino’s own sales as customers now have a wider range of food options. But the pizza chain has also been focusing on growing its carryout sales.

Domino’s CFO Jeff Lawrence said at the ICR Conference that part of its business now represents 45% of its U.S. sales, and Domino’s believes that it can keep growing those orders, which are usually more profitable for its business.

Lawrence also said Tuesday that the company is forecasting food costs will jump 1% to 3% in fiscal 2020 and foreign currency will likely be a headwind.

Domino’s is planning to announce its fourth-quarter earnings Feb. 20.

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