Interim figures for Domino's Pizza (DOM) were accompanied by a warning of “reduced consumer confidence” at home thanks to nominal wage growth and a weaker exchange rate. Earnings downgrades from City analysts swiftly followed. Brokerage Peel Hunt shaved 4 per cent from its 2017 pre-tax profit forecast, and now expect pre-tax profits of £90m for the year ending December 2017, giving EPS of 15p, compared with £85.7m and 13.6p in 2016. That only bakes in a 1 per cent rise in like-for-like sales, despite easier comparative figures as the year progresses.
Elsewhere, Liberum analysts highlighted that like-for-like sales growth has fallen behind a rise in average order value, which suggests volumes are falling across the company’s more mature stores. When it comes to comparable sales, there appears to be a cannibalisation effect from ‘split’ territories – effectively where an existing Domino’s store divides into two. Of the 40 new stores opened during the period, 24 were territory splits. Including the drag from splits, UK like-for-like sales only grew 0.1 per cent during the first half. It’s these new openings which largely account for the 6.5 per cent improvement in systems sales, 3.5 per cent order growth and 2.9 per cent average ticket growth.
| DOMINO'S PIZZA (DOM) | ||||
| ORD PRICE: | 257.4p | MARKET VALUE: | £ 1.27bn | |
| TOUCH: | 257.2-257.4p | 12-MONTH HIGH: | 406p | LOW: 256p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 16p* | NET DEBT: | 61% | |
| Half-year to 25 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016** | 176 | 40.9 | 6.6 | 3.50 |
| 2017 | 211 | 46.2 | 7.7 | 3.75 |
| % change | +20 | +13 | +17 | +7 |
| Ex-div: | 03 Aug | |||
| Payment: | 01 Sep | |||
| *Includes intangible assets of £89.9m or 18p a share **EPS and DPS adjusted for three-for-one share split in Jun 2016 | ||||
