DOMINO'S DIGITAL EARNS BIGGER SLICE OF PROFIT

Written on the 17 August 2011

DOMINO'S DIGITAL EARNS BIGGER SLICE OF PROFIT

SALES generated from eCommerce has skyrocketed for Domino’s Pizza Enterprises with earnings from mobile devices in FY 11 alone tipping $1 million.

The company is on track to acheive 15 per cent growth in FY12-13 and will likely add another 60 stores to the network, following today’s net profit of 21.4 million, up 20.3 per cent on the previous year.

The company achieved sales of $746.4 million while Australia and New Zealand achieved double digit same store sales (SSS) of 13.2 per cent, with Australian achieving its strongest sales in the last 10 years.

Over the past year, Domino’s added 53 stores to its network, with 28 stores in Australia and New Zealand and 25 stores in Europe – with the total number of doors now at 886.

Domino’s CEO and MD Don Meij says the results and sales growth are the result of successful marketing for new product rollouts.

“Our solid performance for the 2011 full year is the result of strong network sales of $746.4 million up 7.5 per cent on the last year. Europe achieved network sales growth of 14.9 per cent while the Australia and New Zealand market achieved growth of 11.3 per cent despite rolling over a 53-week prior year,” he says.

“We reported strong EBITDA of $39.1 million, up 20.2 per cent on full year 2010 despite higher tax and currency movements throughout the year. As a result of continued strong earnings we have a robust balance sheet with a surplus of cash and a positive net cash position of more than $12.5 million.”

Meij said Domino’s SSS were aided by strong promotions in the Australian, New Zealand and European markets.

“In Australia and New Zealand we recorded strong SSS of more than 13.2 per cent, with the growth on our digital business having a dramatic effect on sales, where we have seen in excess of $1 million sales weeks from mobile devices alone,” he says.

“Innovative product launches and a commitment to improving the quality of our ingredients saw customer counts follow in the same growth trends as sales.

“In Europe, Same Store Sales continued to gain momentum in the second half of the year up 6.7 per cent to finish the 2011 full year with growth of more than 5.9 per cent. This was the result of new product launches, value promotions and increased media spend.”

Meij is confident of continuing the current momentum into the 2011/2012 financial year, where he expects the company to deliver net profits in the region of 15 per cent above 2011.

“We have also lifted our Australia and New Zealand market store growth guidance from 620 stores to 750 stores and our goal is to achieve this over the next six years,” he says.

“In Australia and New Zealand Domino’s will have unprecedented levels of investment in its digital platform with the expectation of digital orders providing 60 per cent of the business in the next two and a half years.

“Over the next six years, the company is aiming to have 25 per cent of the business in the Netherlands become corporate stores and for France to have a 5 per cent corporate store mix. This will provide leadership structure and support to the entire system.”

Meij says the company will focus on innovation, quality and value for money to counter increasing costs.

“We’re facing rapid cost increases and we have to beat that with innovation, quality, value for money and providing healthy options for customers,” he says.

Dominos (ASX:DMP) shares increased 7 per cent to $6.10 this morning on a day when Australian shares surged to add $36 billion to the ASX with a welcome 3 per cent rise, following days of intenational trading carnage.


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