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Flat pizza: Domino’s shares smashed as sales outlook slides, profit dips

Domino’s shares suffered a 14 per cent blow this morning after the company announced its profit had fallen on higher costs.

Feb 23, 2022, updated Feb 23, 2022
Domino's Don Meij has revealed a shakeup of the business (pic: Domino's)

Domino's Don Meij has revealed a shakeup of the business (pic: Domino's)

The fall wiped $1.2 billion from the company’s value on the ASX.

Citing “unanticipated challenges” such as store closures because of Covid, the company reported a fall in earnings before interest and tax of 17 per cent in Asia, an 11 per cent increase in Europe and a 6 per cent fall in Australia.

Net profit was $89.1 million for the December half compared with $95.7 for the same time last year. A dividend of 88.4 cents a share was declared, franked to 70 per cent.

It attributed the slide to its Project Ignite in Australia and a “rebasing” of sales in Japan. Project Ignite was a program to provide incentives for franchisees.

Managing director Don Meij said the company was off to a positive start for the second half with network sales up 6 per cent, or 1.7 per cent on a same store basis.

However, the company expected same-store sales for the financial year to be slightly below the three-to-five-year outlook.

“Domino’s will continue to win and keep customers by delivering value, product, service and image at an affordable price,” Meij said.

“This means we will respond to tackle short-term inflationary pressures with a customer first approach, serving more for more – such as upzised meal offerings that a win for customers and franchisees.”

He said the company counter labour pressures by being “the most relentlessly efficient delivery company”.

“We are not immune to the challenges facing the global economy, but these are short term challenges we will navigate through with a continued focus on the long term.

“Importantly, despite this short-term uncertainty there is no question that our business is materially stronger than prior to Covid-19.”

Domino’s added 285 stores to the network in the first half which included the 156 in acquired in Taiwan. Another 129 were organic growth.

 

 

 

 

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