DOMINO’S TO EXPAND AFTER BIGGER SLICE OF PROFIT

Written on the 19 August 2010

DOMINO’S TO EXPAND AFTER BIGGER SLICE OF PROFIT

DOMINO’S Pizza Enterprises Limited (DMP) will open more stores than expected this year, after announcing 39 per cent year-on-year profit growth in the December half.

CEO Don Meij (pictured) says the company’s $8.7 million half year profit exceeds guidance by four percentage points on the back of the successful launch of an iPhone application and a new oven baked sandwiches range.

“The iPhone application was seven times more successful than our business model justified, because you don’t always know how these things will go - it was a relatively new development, you’re out there pioneering,” says Meij.

“The reason is that when you order a pizza over the phone there’s noise in the background, it’s not exactly a relaxing environment, but with this application you can order in your own time.

“You can even track the order – now it’s being made, then it’s in the oven and look, it’s just left the store.”

He says the application and new product range led towards same store sales growth of 4.57 per cent in Australia and New Zealand.

The pizza franchise has also upgraded its forecast store growth for FY10 and the calendar year.

“Last year we forecast 40 to 50 new stores for this financial year, but now it will be in excess of 50 and for the calendar year it will be 70,” he says.

“You have to remember we’re in five countries so it’s not just growth in Australia – we’ve got development units in the Netherlands and France too. And we’ve basically got zero debt, which is even after announcing a dividend of six cents a share.”

Meij hints at a new significant product launch in May but could not reveal its nature at this stage.

“We’re going to speed up with strong growth this year, continue investing in innovation and all our units have got growth in cash,” he says.

DMP recorded a 7.6 per cent on the previous half in total network sales to $353.3 million, with strong growth in Europe as well.

“In Europe, network sales growth was up 13.6 per cent on the same corresponding period last year,” says Meij.


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