Shares in Domino’s Pizza (DMP) hit a new all time high yesterday of $32.75 as they soared 20% after it has upgraded its full-year profit growth guidance and boosted final dividend.
Chief executive Don Meij told the market the company now expects the pizza chain to lift full-year net profit by about 32.5% and earnings before interest, tax, depreciation and amortisation by about 30%, compared with previous guidance of 25%.
Domino’s increased its interim dividend to 24.6 cents a share from 17.7 cents a share, a rise of 38%.
As a result the shares leapt higher during the day to close up 20% at $32.75, for a market cap of more than $2.85 billion – it added more than half a billion dollars in value yesterday.
The shares have soared almost 60% in mid-August when the company sharply upgraded its guidance.
DMP 1Y – Domino’s shares continue to surge
Mr Meij said Domino’s would accelerate its new store-opening program, opening between 180 and 200 stores across globally this year, compared with previous guidance of 175 to 185 stores and the 132 opened in 2014.
Total sales rose 29.5%. EBITDA rose 41.2% to $60 million. Same-store sales are now expected to rise 6% to 8%, from earlier forecasts of 4% to 6%.
Mr Meji says the strong gains followed management changes in Europe, the acquisition of 75% of the Domino’s master franchise in Japan almost two years ago, the use of online technology to drive demand, cheaper menus, and new products such as lime and chilli pulled pork pizzas in Australia and goats cheese toppings in France and Belgium.
In Australia, same-store sales rose at the fastest rate in four years after Domino’s introduced a new $4.95 Cheaper Everyday menu and Pizza Mogul, which allows customers to customise pizzas online and market their creations through social networks, taking a share of the profit of the pizzas they sell.
Online customer counts had risen 22.3% in Australia and New Zealand, boosting online sales by 60%.
Comment: Dominos is both a growth stock, and an income share, with strong technology overlay. It once again underlines the importance of using technology to cut costs and drive new business in ways that were not seen even as recently as a few years ago. You don’t have to be an Apple or a Google to be part of the tech space – using their technologies and leveraging off them can make a lot of money, as Dominos shows – and it keeps them in touch with the right demographics among consumers – young, smartphone users.
