Domino’s eyes hundreds of new stores as global sales soar
Domino’s boss Don Meij is confident his pizza business can outperform itself across the second half of the year despite facing earnings ‘speed bumps’ including returning to paying executive bonuses.
Mr Meij told The Age and The Sydney Morning Herald the business was aiming to open “notably more” stores across the next six months of the financial year, having already opened 131 stores in the first half, as the business continues to benefit from a boom in food delivery brought on by COVID-19.
“We do expect to continue to have strong sales [for the second half]. We’re going to do a much bigger number.” he said. “However, in our earnings we do expect to have some speed bumps.“
These headwinds include a weaker Australian dollar against the Japanese yen along with Domino’s having to match extremely high growth rates at its Japanese division. Mr Meij also said the payment of executive bonuses would likely weigh on earnings.
“Most of the executives didn’t get paid bonuses last year because we took government support at that time, though we have handed that back,” he said. “So management in our team will likely get incentives this year so that’ll be a cost back into the [business].”
Mr Meij’s comments come as Domino’s unveiled its half-yearly earnings for the first six months of the financial year, which smashed analyst expectations.
Sales across the network grew 16.5 per cent to $1.84 billion and its net profit after tax rose 32.4 per cent to $96.2 million. Same-store sales growth jumped 8.5 per cent thanks to the heightened number of stores opened across the half.
Much of the business’ growth in recent years has been from the company’s international operations in Europe and Japan, and this half was no exception. Japanese sales soared 42.6 per cent and earnings more than doubled to ¥4.2 billion ($51 million). European sales were slightly more subdued but still gained 13.8 per cent, with a near 20 per cent rise in earnings.
Mr Meij said the worsening COVID-19 situation outside of Australia had been “very challenging” but acknowledged the business was benefiting from locked-down customers opting for more takeaway food.
Sales across the company’s 833 Australian and New Zealand stores also rose despite slower growth in recent years as the company focused on its international operations. Total sales rose 5.7 per cent to $648 million, and better margins saw earnings rise 9.8 per cent to $63.7 million.
Sales for the first seven weeks of the new financial year continued to rise, up 20.9 per cent for the period, or 10.1 per cent on a comparable store basis. Domino’s maintained its medium-term outlook of comparable growth of 3 to 6 per cent, but Mr Meij expects the company’s full-year result to be above that guidance.
The company is also actively seeking to acquire new territories where suitable. Domino’s will pay shareholders an interim dividend of 88.4 cents per share on March 11.
More to come
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Dominic Powell writes about the retail industry for the Sydney Morning Herald and The Age.
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Source: Thanks smh.com