Increased cash balances allowed Domino's Pizza (DOM) to ramp up the dividend after its first-half results exceeded market expectations. The company registered like-for-like sales growth of 10 per cent in the UK, which drove its domestic operating profits up 16 per cent to £34.6m. It also saw strong sales growth in Ireland, a reversal of the negative trend in Germany and slightly wider losses in Switzerland due to new store openings.
A mixture of bricks and mortar and digital strategies is paying off. In the UK, there were 21 store openings - up from eight last year - bringing the total estate to 813. But it is the company's investments in digital channels that management seems most upbeat about. They invested a further £1.4m in its online presence during the period. A full 77 per cent of its UK orders are now made online, with 51.6 per cent carried out through its app, which is now its largest distribution channel.
Initiatives such as allowing customers to create their own pizza - so far they have devised about 280,000 iterations - and the meal-deal offer, which attracts families, have also helped sales. Dessert and drink volumes were up 24 per cent and 43 per cent respectively, although they tend to come with lower margins.
Analysts at Numis have upgraded their pre-tax profit expectations to £64m for 2015, giving EPS of 31.5p compared with 26.4p for 2014.
| DOMINO'S PIZZA (DOM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 835p | MARKET VALUE: | £1.4bn | |
| TOUCH: | 835.5-838p | 12-MONTH HIGH: | 850p | LOW: 536p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 52p | NET CASH: | £19.2m | |
| Half-year to Jun 28 | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 146 | 25.0 | 12.0 | 7.81 |
| 2015 | 157 | 32.0 | 15.3 | 9.00 |
| % change | +8 | +28 | +28 | +15 |
Ex-div: 6 Aug Payment: 4 Sep | ||||
