Domino's reports that net income was down 47.9% for the fourth quarter and 64.3% for the full year versus the prior year periods, driven primarily by increased interest expense from higher borrowings under the company's new debt structure and, to a lesser extent, a decrease in domestic supply chain margins resulting from lower volumes and lower domestic company-owned store margins. However, the company say this was offset in part by continued strong performance in international operations.
Diluted EPS was $0.26 on an as-reported basis for the fourth quarter,down $0.23 from the as-reported prior year period. However, excluding items affecting comparability, diluted EPS declined $0.28. Diluted EPS on an as-reported basis was $0.59 for the full year 2007, down $1.06 from 2006 on an as-reported basis. Diluted EPS, as adjusted for the full year 2007 was $1.03, down 34.0% versus $1.56 for the full year 2006.
In a prepared statement, David A. Brandon, Domino's Chairman and Chief Executive Officer, said: "The combination of unprecedented cost inflation and cautious consumer spending continues to create significant challenges for us in our domestic market. However, instead of worrying about external factors we cannot control, we continue to stay focused on those factors we can control. There isn't a challenge we face that won't be cured when we regain positive traffic growth in our domestic business. We are obsessively focused on improving our store operations, including our service levels, product consistency and brand image. And, we continue to adjust our marketing strategies in an effort to jumpstart traffic throughout our domestic system of stores.
"Our international markets continue to grow as a percentage of Domino's overall sales and profits and has established a strong track record for reliable, vibrant growth. As our international business marks its 25th anniversary in 2008, I want to acknowledge the tremendous job our master franchisees have done over the years and highlight the important role this division will play in the future growth of our company."
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