Domino’s suffers big dip in shares as it warns on international sales
Shares in Domino’s Pizza fell seven per cent this morning after the firm warned it will no longer break even in its international division.
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The figures
Domino’s group sales rose 4.3 per cent to £324.4m.
UK and Republic of Ireland sales grew 4.8 per cent to £299.3m.
International sales remained weak, slipping two per cent to £25.1m.
Why it’s interesting
Domino’s first-quarter results were sliced down the middle, as robust performance in the UK and Ireland failed to translate to its international business.
Overseas, the fast food chain failed to satiate customers, with sales dropping two per cent compared to last year. The company, which operates in Switzerland, Liechtenstein, Iceland, Norway and Sweden, said it no longer expects to break even in its international business this year.
This came despite solid trading in the UK and Ireland, with sales ticking up almost five per cent. Domino’s has opened 11 stores in the year to date, taking its total up to 1,271.
The firm said it has seen considerable success for its new Delight pizzas, which contain fewer than 650 calories.
The figures were also boosted by a bumper day of trading on New Year’s Day, as Domino’s cashed in on hangover hunger to sell 12 pizzas every second.
But the firm is locked in an unsavoury battle with many of the franchisees who own and operate its stores.
The company’s rate of store openings has slowed considerably amid negotiations with franchisees, who have argued they deserve a greater slice of the profits.
The chain is reportedly looking to replace three key bosses, including chief executive David Wild, in a bid to revamp the business.
“Domino’s are struggling to make their international businesses fire on all cylinders,” said Steve Clayton, fund manager at Hargreaves Lansdown.
“A promised update at the half year stage is unlikely to placate investors who have rightly been expecting to see the group’s turnaround efforts bearing fruit.”
Shares in Domino’s slipped more than seven per cent following the announcement.
Read more: Domino's Pizza franchisees demand meeting with top boss over falling profit
What Domino’s said
“The year has started well across our core UK and Republic of Ireland markets, which account for 90 per cent of our business,” said chief executive David Wild.
“Internationally, performance remains disappointing and trading visibility is limited; given persistently weak system sales in all our international markets we no longer expect this part of our business to break-even this year.”