The introduction of lockdown measures in late March was a boon for takeaway food. Indeed, Domino’s Pizza (DOM) saw sales from delivery rise by almost a third in the second quarter as delivery numbers rose and people bought more items per order. That improvement more than mitigated the effects of the group switching off its collection function during the peak of the Covid-19 outbreak - helping UK & Ireland like-for-like sales to rise by 3.2 per cent over the first half to June.
Still, staying open during the crisis has not come cheap. Just over £6m in Covid-19 related costs meant that UK and Ireland operating profits contracted by 4.1 per cent to £50m. On a statutory basis, including losses from the disposal of the Norwegian business, post-tax earnings slipped by 15 per cent to £19m.
That said, trading in the second half has been “encouraging” so far, with most stores now open again. Domino’s also hailed the return of Premier League football and a rise in ‘staycations’ as drivers of demand. Bosses expect costs relating to coronavirus to fall in the final six months of the year.
New chief executive Dominic Paul said that Domino’s was “working hard to build constructive relationships with our franchisees”, with whom liaisons have been difficult for several years. Franchisee profitability improved as the average cash profit margin rose to 12 per cent, from 10 per cent – something that could help the challenging situation, in broker Numis’s view. Analysts here expect group adjusted EPS of 16.8p for 2020, down from 17.6p in 2019.
| DOMINO'S PIZZA (DOM) | ||||
| ORD PRICE: | 312p | MARKET VALUE: | £ 1.4bn | |
| TOUCH: | 310-315p | 12-MONTH HIGH: | 367p | LOW: 221p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 22 | |
| NET ASSET VALUE: | * | NET DEBT: | £202m | |
| Half-year to 28 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)** |
| 2019 | 250 | 40.3 | 7.0 | 4.20 |
| 2020 | 247 | 45.8 | 8.3 | 5.56 |
| % change | -1 | +14 | +19 | +32 |
| Ex-div: | 20 Aug | |||
| Payment: | 18 Sep | |||
*Negative shareholders' equity. Includes intangible assets of £35.3m or 8p a share **5.56p dividend represents the deferred full-year pay-out | ||||
