Domino's Pizza celebrates its 25th anniversary this year, but the business is showing no signs of slacking. Its latest half-year results - released just two weeks after its period-end - showed a like-for-like sales increase of 13.7 per cent across the company's 553 mature stores, almost double the rate of growth achieved a year earlier.
And while much has been made of the World Cup effect on Domino's performance, in fact a range of initiatives contributed to the strong volume uplift. "It's difficult to put your finger on any one thing", said chief financial officer Lee Ginsberg, pointing out that although sales did climb sharply during England games - up 65 per cent on the day of the crunch match with Slovenia - like-for-like sales this year were already up 12.8 per cent by the time the tournament started. He pointed to the 'Two for Tuesday' promotional campaign as a key driver, turning what was previously the quietest day of the week into the third busiest. And Domino's shrewd sponsorship of ITV's hit, Britain's Got Talent, proved money well spent, delivering huge TV audiences.
More orders came online, too, climbing 61.4 per cent to £56.9m and now account for just under a third of all UK delivered sales. That made a difference, because web order values are 20 per cent higher than those placed over the phone. That offset the increased promotional activity, which meant sales growth slightly lagged volume growth, up 20 per cent on a like-for-like basis.
That huge volume uplift also meant a major uplift in profitability, with underlying pre-tax profits up 28.6 per cent to £17.5m as overheads and ingredient costs grew more slowly than sales. Mr Ginsberg also pointed to the new Milton Keynes commissary which will generate efficiency savings of £400,000 in the second half and £1m next year. It will also be able to support the planned expansion to 1,200 stores, nearly double the current 627 strong chain.
Broker Altium Securities expects full-year adjusted pre-tax profits of £35.6m and EPS of 16p (2009: £29.9m/13.8p).
DOMINO'S PIZZA UK & IRELAND (DOM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 403p | MARKET VALUE: | £648m | |
| TOUCH: | 403-405p | 12-MONTH HIGH: | 410p | LOW: 205p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 23p | NET DEBT: | 46% | |
| Half-year to 27 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 73.7 | 13.1 | 5.98 | 3.50 |
| 2010 | 91.3 | 17.0 | 7.77 | 4.50 |
| % change | +24 | +30 | +30 | +29 |
Ex-div:21 Jul Payment:20 Aug | ||||
