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Domino's exits overseas markets

The pizza company has not yet given detail about timeframe or cost of this exit
Domino's exits overseas markets

Domino’s Pizza (DOM) has announced that it intends to exit its international business, sending its shares up in response. Such a reaction is understandable, as the international business had been bleeding money, with a £6.4m operating loss in the first half of the current financial year. Outgoing chief executive David Wild said the international performance “remains disappointing”, and a review of the business with external consultants determined that “we are not the best owners of these businesses”. Management has yet to give details on timeframe and costs surrounding the exit, leading many analysts to hold off adjusting expectations to reflect this change.

IC TIP: Hold at 280p

The international exit will allow management to focus on operations in the UK and Ireland. These markets reported system sales growth of 3.9 per cent, with online sales growing to account for 90.9 per cent of delivery sales. But the dispute with franchisees over profit sharing is ongoing. Mr Wild called the situation “complex” as it impacts normal working practices, and is expected to continue into 2020. Domino’s opened 12 stores during the third quarter, in line with its downwardly revised forecast.