The resignation of Domino's Pizza (DOM) chief executive Lance Batchelor to take up a new position in a private equity company added to the sense that the company needs a change of direction if its volume-dependent business model is to deliver the earnings growth that the market had previously taken for granted. Signs that growth is slipping and competition becoming more fierce has a taken a toll on the share price, which is down by over 20 per cent in the past month alone.
Domino's problems relate to the fact that it is facing structural problems in its core UK market, with the sheer number of stores it has opened over the years resulting in the increased cannibalisation of sales. Management has already pared back the number of store openings to 50 for this financial year, which CannacordGenuity analyst Wayne Brown says illustrates the mixed outlook for sales growth in 2014. The company's next trading update is on 8 January 2014.