Domino’s Misled Investors with Inflated Global Store Growth Projections, Class Action Lawsuit Says

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A proposed class action lawsuit alleges Domino’s Pizza, CEO Russell J. Weiner and CFO Sandeep Reddy misled investors about the company’s projected global net store growth.

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According to the 28-page securities lawsuit, the defendants “knowingly or recklessly” issued several false and misleading statements starting in December 2023 about expectations to open “1,100+” stores annually from 2024 to 2028. The complaint claims that investors were financially injured after the company announced its second quarter 2024 financial results, which revealed its inability to meet this target and reportedly triggered a drop in stock value.

Per the filing, a July 18, 2024 press release from the company disclosed that Domino’s largest master franchisee, Domino’s Pizza Enterprises, was struggling with respect to new store openings and closures of existing locations. The pizza chain revealed that it was “temporarily suspending its guidance metric of 1,100+ global net stores,” and that it expected to fall “175 to 275 stores below its 2024 goal of 925+ net stores” internationally, the suit relays.

Upon this news, Domino’s stock price fell 13.57 percent, according to the complaint.

“As a result of [Domino’s] wrongful acts and omissions, and the precipitous decline in the market value of the company’s securities, [the plaintiff] and other class members have suffered significant losses and damages,” the class action lawsuit says.

The case notes that Domino’s was required by federal securities law to disclose to investors “any known trends or uncertainties” that were reasonably likely to have an unfavorable impact on its business. Instead, the defendants concealed their major franchisee’s growth concerns and repeatedly issued statements touting their confidence in reaching the global store growth target, the complaint contends.

For example, Weiner stated in a fourth quarter 2023 earnings call that the defendants “still feel really strongly about the guidance we gave, the 1,100 plus stores and 5,500 over the next five years,” the filing relays.

“Had [the plaintiff] and the other members of the class known the truth, they would not have purchased or otherwise acquired said securities, or would not have purchased or otherwise acquired them at the inflated prices that were paid,” the Domino’s lawsuit claims.

The suit looks to represent all persons and entities that purchased or otherwise acquired Domino’s securities between December 7, 2023 and July 17, 2024.

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