Domino’s Group (DOM) chief executive David Wild announced, alongside this set of half-year results, that he plans to retire, with an effective date yet to be given. The move comes at a time when the pizza company has struggled with its franchisees – new store openings have been delayed as franchisees demand a greater share of profits before proceeding with new locations. Mr Wild called the situation “complex” and that a resolution isn’t expected until sometime in 2020.
Franchisee disputes are not the only area where Domino's has struggled. The decline in pre-tax profits was due in part to the operating losses of £6.4m in the international business, which widened from a £4.1m loss over the whole of 2018, with Norway proving to be the worst affected country. The profit decline was also exacerbated by higher interest costs after net debt increased by £35.6m to £239m. By contrast, operating profit generated in the UK and Ireland improved by 7.1 per cent to £51.6m. The average discount on menu prices remained stable at 39 per cent, but the proportion of orders sold on a discount increased to 89.6 per cent, from 88.1 per cent during the same time last year.
Analysts at Numis expect pre-tax profits of £86.8m during 2019, giving EPS of 14.9p, increasing to £91.5m and 15p in 2020.
|DOMINO'S PIZZA GROUP (DOM)|
|ORD PRICE:||239p||MARKET VALUE:||£1.11bn|
|TOUCH:||239-240p||12-MONTH HIGH:||325p||LOW: 220p|
|DIVIDEND YIELD:||4.0%||PE RATIO:||28|
|NET ASSET VALUE:||*||NET DEBT:||£239m|
|Half-year to 30 Jun||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
|*Negative shareholders' equity, includes intangible assets of £103m, or 22.2p a share|