Domino’s Pizza, Inc. (NYSE:DPZ) Q4 2022 Earnings Call Transcript

David Tarantino: Hi! good morning. My questions is on the margin outlook and Sandeep, I was wondering if you could help to frame out how you think the EBIT margin will progress if you hit the low end of your targeted range in 2023.

Sandeep Reddy: Yeah, so that’s a great question, David. So look, I mean as far as we’re concerned, the guiding principles that we’ve actually outlined is revenue should be growing faster than expenses. So when you look at the guidance range on global retail sales and you look at our guidance range on G&A, can see that essentially, even at the low end our G&A is basically below that in terms of growth at the midpoint. And so I think straight away that gets you into a place where you can be margin accretive, so that’s point number one. Point number two is, we actually experienced a lot of headwinds this past year from foreign exchange, and I think that actually had a 50 basis point negative impact on our operating margin in ’22.

Unfortunately, given where we are, we still see a little bit more headwind, but not in the same magnitude given where current rates are. And so that would be an offset to some of that operating improvement. But from a mix standpoint, with the corporate store sales that have actually happened, we’ll now get three or more full quarters from that, that helps our margins. So I think overall when we look at the margins, my expectations for margins is that margins will improve. But I think when we talked about pre-pandemic margins or 2019 margins with the currency headwinds that we experienced in ’22, that’s probably further away than ’23, but it’s not something that we’re saying its unattainable. It’s more a question of time and some of the other factors that hit the P&L.

Operator: Thank you. This does conclude the question-and-answer session of today’s program. I’d like to hand the program back to Russell Weiner for any further remarks.

Russell Weiner: Well, thank you, and thank you everybody for joining the call this morning. Sandeep and I look forward to speaking with you in April to discuss our first quarter results. Until then, we’ll talk soon.

Operator: Thank you ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect today. Good day!