Domino’s released its half yearly financials yesterday and oh boy did that end badly.
The share price finished down 24% on the day, at $54.37.
The cause? Lower than anticipated sales. Same store sales were down 0.6% and total sales were down 4.0%. That has an exponential effect on profits: EBIT was down 21% to $114m, and underlying NPAT was down 22% to $72m
And the sales drop continues. “Sales growth in the second half has been less than anticipated”, they say.
“Domino’s anticipates Same Store Sales growth will be below the medium term outlook of +3-6% growth, as a result of most-recent tumultuous trading conditions.”
They are blaming their decision to lift prices, such as by applying surcharges. This negatively impacted customer repurchasing rates, especially in the markets of Japan / Germany where customers order less frequently.
The reduction in ordering frequency resulted in December trading being “significantly below our expectations”
“The effect of higher prices, reducing customer repurchasing, continued into January”
Now, companies don’t like their share prices going down. They aim for the opposite. Given how badly DMP was pummelled as a result of these figures, maybe they’ll roll back their increases, and our cheap pizzas will return.
Used to get Domino’s once every few months but stopped a few years ago.
Decided to get it last month and noticed their pizzas are so small now. With the double whammy of prices going up and size shrinking I’d rather go to my local pizza store where they at least still make large sizes and jam on the toppings.