RECORD SAME STORE SALES GROWTH BOOSTS DOMINO'S EARNINGS
Written on the 8 November 2016
HUNGER for Domino's Pizza's new menu has pushed Australian same store sales up 17.66 per cent since the start of FY17, the largest growth in the company's history.
The scramble to try the new pizzas has led the Brisbane-based company (ASX: DMP) to upgrade its full-year 2017 profit forecast and growth outlook today.
The company predicts EBITDA to rise 30 per cent compared to FY16, up from its previous prediction of 25 per cent, while underlying NPAT will grow 30 per cent.
"Our new menu, combined with the ongoing technology improvements we are rolling out to make it easier and more rewarding to order from Domino's, demonstrate why we have grown our share to 38 per cent of the Quick Service Restaurant Pizza sector," says Group CEO and managing director Meij (pictured).
Meanwhile, Domino's Europe operation recorded same store sales increases of 3.77 per cent, while in Japan it dropped 0.59 per cent.
"These results give us confidence to upgrade our guidance for ANZ same store sales, with +12-14% growth expected this year (up from +10-12%) and reaffirm our Europe (+5-7%) and Japan (0-+2%) same store sales guidance," says Meij.
The company says its new store openings will be at the upper level of its 175-195 guidance.
Planned store numbers in the Netherlands will increase from 300 to 400 stores, lifting the overall Europe total to 2,600 stores by 2025, and the long-term group forecast to 4,650 stores from today's number of 2,022.
The enterprise bargaining agreement negotiations, which led some analysts to question whether Domino's would take a big hit to profit, are expected to expected to conclude in the second half of the financial year.
"As these negotiations have taken some time, longer than we anticipated, largely as a result of significant disruption in the industrial relations environment, we voluntarily increased the rates paid to our drivers by +9% early this year, in addition to a +2.4% federal wage increase," says Meij.
"In the interim, we budgeted, and intend to, voluntarily increase our wages for the majority of our team members in January."