Despite a lift in sales, a costly legal battle has seen pizza chain Domino’s opt to downgrade its guidance once again.
In its half-yearly results, Domino’s revealed a 14.6 per cent lift in global food sales to $1.43bn, driving a 12.1 per cent lift in EBIT to $108.3m.
Revenue was also up, with the group achieving a 23.7 per cent growth rate to $702m, however underlying profit was weighed down by a settlement with Precision Tracking worth millions.
The four-year legal battle finally came to end in October when Domino’s announced a confidential settlement, which combined with compliance costs associated with the nationwide industrial relations review was revealed to have cost the company $10.9m.
As has now become a common theme for the brand, Domino’s used the half-yearly results announcement to lower expected new store openings from the original 225 to 250 mark, down to 200 to 215.
Further pressure was compounded by the cost of rebranding of a number of German and French stores, however online sales proved an important vertical for the Brisbane-based company.
Over the half, Domino’s online platforms processed more than 2.4 million orders, equating to more than two orders every second.
The 16.5 per cent, or $132.2m rise in online sales furthers the company’s vision of Leading the Internet of Food in Every Neighbourhood, with this half marking a series of significant milestones.
The brand surpassed 1000 branded stores in Europe, 700 stores in Australia and 300 stores in Germany, opening 77 new stores and converting 72 Hallo Pizza outlets.
Don Meij, Domino’s Group CEO and managing director said the global results indicated the brand was making the right moves overseas.
“Europe and Japan account for more than 70 per cent of our revenue and, more than half of our EBITDA – a testament to the depth of expertise from our team members and store managers, franchisees, and our country CEOs,” Meij said.
“With a population base in our current overseas markets more than 12 times Australia, our global business provides not only a significant runway for future growth, but also a natural hedge against short term conditions affecting any single country, or region.”
“Management is pleased with the performance in the Half but we, like every Domino’s team member, look to improve our performance every day.”
Comparatively, Domino’s reported soft domestic results for the half, achieving a network sales growth of 6.2 per cent to $592.5m, opening 13 new stores and revealing a 3.5 per cent growth in Same Store Sales (SSS).
Nick Knight, Domino’s Australia/New Zealand CEO said domestic growth, while outperforming peers, failed to live up to the company’s lofty expectations.
“We’ve come through an unprecedented cost headwind and have been able to do so because of the close work with our franchisees and customers – with new products and technology to make stores more efficient, and to give our customers great value,” Knight said.
“Growth has been very strong in New Zealand and in Australia, where growth in fast food has been slowing, we’ve continued to grow our market share. We expected higher sales growth and a performance better than we delivered, and we will be redoubling our efforts to do both in the months ahead.”