The Domino's Pizza Enterprises Ltd (ASX: DMP) share price is on the move on Tuesday.
At the time of writing, the pizza chain operator's shares are down 9% to $29.44.
This follows the release of its half year results before the market open.
Domino's share price sinks on results day
- Network sales down 2.9% to $2.08 billion
- Same store sales down 0.6%
- EBIT down 6.7% to $100.6 million
- Interim dividend maintained at 55.5 cents per share
What happened during the half?
For the six months ended 31 December, Domino's reported a 2.9% decline in network sales to $2.08 billion. This reflects a combination of a 0.6% decline in same store sales, foreign exchange headwinds, and store closures.
Australia & New Zealand same store sales were positive at +0.6%. Management highlights that this was a big win given that the company was compounding very strong sales in the prior corresponding period. This was driven by new product launches and supported by operational excellence.
Asia same store sales were down 4.2% due to weakness in Japan. This offset a positive performance in South East Asia where Taiwan and Malaysia cycled external headwinds and exited the half with same store sales growth of >10%.
In Europe, the company recorded same store sales growth of +0.6%. This reflects a "pleasing result" from the new Benelux branding campaign, Honour the Craving, and an improvement in Germany after cycling the highly successful Doner kebab campaign in FY 2024. This was partially offset by continued weakness in France.
Domino's EBIT was down 6.7% over the prior corresponding period to $100.6 million due to weakness outside Australia.
Australia EBIT was up 7.6% to $67.7 million, but Asia EBIT was down 19% to $17 million and Europe EBIT was down 11.1% to $32.3 million. Japan and France are now the subject of close focus to address underperformance. This includes mass store closures.
One positive, though, was that the company's franchisee profitability (EBITDA) increased 13.7% to $96,400. Management believes this "is an important step in restarting our growth flywheel, underlining the importance and urgency of more savings and sales."
Domino's CEO and managing director, Mark van Dyck, adds:
The performance from leading markets Australia and the Benelux demonstrate it is possible to win share in our category and in QSR when we focus on delivering for the customer first, with quality products, great value, and more effective marketing with a seamless ordering experience. We are working to apply those lessons to our other markets, with focused attention particularly on improving performance in Japan and France.
Outlook
No guidance has been given for FY 2025. However, management spoke a little about its plans. Mr van Dyck said:
Domino's operates in a dynamic industry with substantial growth potential. Success will come from building on the Domino's brand, better capitalising on our leading market positions, investing in our franchise partners, delivering consistently high-quality food and experiences and telling our story with transparency and passion. I'm confident we'll make it easier to be a customer and encourage customers to visit more often.
We are committed to returning to profitable growth and delivering improved franchise partner and shareholder returns. While challenges remain, we are making early progress, we understand the urgency of the task and we invite shareholders to track our progress.
