Domino’s Post-Earnings Plummet Drives CE100 Index Lower by 4.2%

The CE 100 slipped 4.2%, as the “Eat” sector helped lead all pillars lower, down 7.3%

And within that group, earnings continued to roll in. Management sentiment about the state of the consumer and the impact of inflation (at least when it comes to pizza) remained mixed.

Domino’s slipped 16.7%.

As reported here,  consumers are grappling with the rising price of getting meals delivered to their doorsteps.

“Inflation impacted delivery due to the added expenses of fees and tips on that channel. Our research shows that a relatively higher delivery costs during inflationary time leads some customers to prepare meals at home instead of getting them delivered,” Domino’s CEO Russell Weiner said.

Pressures on Disposable Income

“We believe this dynamic will continue to pressure the delivery category in the short term, as long as consumers’ disposable income remains pressured by macro-economic factors,” he said.

To that end, same-store delivery sales were down 6.6% year over year.

DoorDash was 10.8% lower, giving up some of the gains seen immediately after earnings earlier in the month. The company’s earnings report showed that DashPass membership grew by about 50% throughout 2022, from 10 million at the close of 2021 to 15 million.

And during this past week, DoorDash said it had struck a deal with discount grocery firm ALDI to bring on-demand grocery delivery to nearly all ALDI locations across 38 states.

Olo slipped 4.4% lower for the week. The restaurant-focused B2B software-as-a-service (SaaS) platform’s own earnings show that average revenue per unit (ARPU) increased 13% year-over-year to approximately $571 per company materials. Ending active locations increased 10% year-over-year to about 87,000. And in the midst of it all, the great digital shift continues.

“In the past year, we’ve moved into drive-thru and on-premise categories that represent roughly 38% and 24% of overall restaurant transactions respectively, more than doubling our serviceable footprint,” founder and CEO Noah Glass said on the call. “Currently, nearly 100% of drive-thru and on-premise transactions are analog, and as Olo moves into both on- and off-premise as a focus, we have a great opportunity for Olo to unlock the path to digitize 100% of transactions.”

Beyond the “Eats” segment, WeWork slid 20.3%, helping drive the “Work” sector down 3.8%. The company’s fourth-quarter sales showed an 18% increase year-over-year. Physical occupancy was 75% at the end of the fourth quarter. But guidance came in below expectations, as layoffs, particularly in the tech sector, are reducing companies’ demand for physical workspace.

Some Gains in the Mix

None of this is to say that earnings season was a complete downer for the CE 100. MercadoLibre shares surged 5%.  The company’s earnings materials showed that Our FX-neutral GMV growth accelerated to 35% in Q4’22, with Brazil (22% FX-neutral GMV growth) and Mexico (28% FX-neutral GMV growth) driving the acceleration. Company-wide unique active users stood at 97 million, up 18.2% from the year-ago tally of 82 million. Total payment transactions in the most recent quarter were 1.7 billion, up from slightly more than 1 billion last year.

And Block, formerly Square, saw its shares gain 3%. In our own coverage of Block’s earnings, we reported that the company continues to see traction in its buy now, pay later (BNPL) business.

BNPL contributed $132 million in revenues in the quarter, according to company materials, where the company reported $4.7 billion in sales. In the fourth quarter of 2022, Square gross payments volume was $48.6 billion, up 16% YoY on a constant currency basis.

The Cash App mobile wallet, management said on the conference call with analysts, is helping cement Square’s ecosystem across payments and banking. Cash App’s installed base grew to 51 million monthly transacting actives in December, up 16% year on year, according to Chief Financial Officer Amrita Ahuja.

Management commentary on the call claimed that Cash App’s momentum should continue in the wake of building out its Banking offerings, boosted by its Savings feature. Two out of three of those 51 million active users are transacting weekly. With a nod to BNPL, the company expects GMV growth of 19% year over year, an improvement compared to 14% growth in the fourth quarter.