There must be some embarrassed shareholders in Domino’s Pizza Enterprises (DMP) around this morning after their early panic yesterday in the wake of the company revealing solid full year results.
The usual collection of day traders, hedge funds and other nervy short term investors sold down Domino’ shares by 9%, to a day’s low of $37.43, before sellers remorse overtook many of them and they all but reversed the loss. Domino’s shares closed down 0.2% at $41.07.
Domino’s has been one of the best performed companies in the ASX 200 in the past year with the shares up more than 60%. Yesterday’s results must have prompted some profit- taking (that’s the charitable explanation) but on a second and third reading, many seem to have bought back into the stock in the afternoon
Domino’s management made it clear it wants a bigger slice of the pizza pie in Australia and Japan after delivering its eighth consecutive year of profit growth, reporting a 40% jump in net profit to $64 million in 2015.
The result, which was on the back of a 19.3% in revenue to $702.4 million, beat market consensus forecasts around $62 million and was well ahead of previous company guidance.
After the 44% jump in first-half net profit, Domino’s upgraded its full-year profit guidance in February, forecasting a 32.5% improvement in net profit and 30% growth in earnings before interest, tax, depreciation and amortisation.
Same-store sales rose a solid 8.6% – ahead of forecasts between 6% and 8%.
The company said its sales in Australia jumped 11.3%, thanks to strong promotion of the $4.95 “cheaper All Day” pizza offerings, new toppings and digital technology that cuts the time it takes to order a pizza and enables customers to customise pizzas online and market their creations through social networks (and sharing profits and revenues).
DMP 5Y – Domino’s profit up 40% to $64m
Domino’s also rolled out GPS Driver Tracker (which is being heavily promoted on TV) during the June half, enabling customers to track their pizza delivery.
Chief executive Don Meij expects net profits to grow 20% this year. Same-store sales are expected to grow 6 to 8 per cent in Australia and New Zealand.
He said in a statement yesterday that Domino’s “has seen record profits and explosive growth over the past five years which is largely attributed to product innovation and world-first digital initiatives.”
He said the company opened 54 new stores opened in Europe in the year ended June 30, “a new full-year record" and that will soon open the 400th store in Japan.
All up Domino’s intends to opening 200 new stores across the group’s markets in the next year.
