UPDATE 2-Domino's profit beats on tighter cost controls

13 October 2009 @ 08:51 am EDT

Domino's Pizza Inc (DPZ.N) reported a higher-than-expected quarterly profit on Tuesday, boosted by lower interest expense and tighter cost controls.

Domino's, which competes with Yum Brands Inc's (YUM.N) Pizza Hut and Papa John's International Inc (PZZA.O), said net income rose to $17.8 million, or 31 cents a share, in the third quarter ended Sept 6 from $10.1 million, or 17 cents a share, a year earlier.

Excluding a $14.3 million pretax gain from retiring debt, profit was 17 cents a share, topping the analysts' average estimate of 15 cents, according to Thomson Reuters I/B/E/S.

The pizza chain, which benefited from reduced debt levels and decreased overhead costs, said lower interest expense pushed profit up by about 3 cents a share.

Revenue fell 6.5 percent to $302.7 million. Same-restaurant sales, a key indicator of performance, were flat in the United States and up 2.7 percent internationally.

The Ann Arbor, Michigan-based chain now appears to be outperforming rival Pizza Hut in the United States. The Yum unit, which is seen as a more expensive option than Domino's, recently reported a 13 percent decline in U.S. sales at established restaurants for the third quarter.

Sales at established U.S. Domino's restaurants were down 2 percent at company-owned locations, but rose 0.3 percent at those operated by franchisees.

Domino's shares were unchanged at $9.37 in trading before the market opened.