Domino's has the '˜X Factor' as pizza chain upgrades profit forecast

Domino's Pizza expects to serve up higher than expected profits after the X Factor helped it post a strong end to the fourth quarter.

Tuesday, 30th January 2018, 8:37 am
Updated Tuesday, 30th January 2018, 8:40 am
Domino's has published a trading update Photo: Anna Gowthorpe/PA Wire

The food chain reported an 18.2% rise in sales across the group to £321.8 million in the 13 weeks to December 24, while in the UK revenue increased 10.1% to £294.7 million.

UK like-for-like sales were up 6.1% in the period, with Domino’s adding that the start of the X Factor final on December 2 acted as the “catalyst” for its biggest day of sales for the year.

A record 95 new store openings in the UK in 2017 also drove sales, Domino’s said, while also signalling that full year revenues will grow 8.7% in the UK.

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Boss David Wild said that as a result, full year underlying pre-tax profit is expected to be “slightly above” the current range of market expectations.

“We are pleased to report a good performance in quarter four, completing another year of significant progress and growth for Domino’s.

“With a record year for new store openings and continued like-for-like sales increases, the UK business has demonstrated its resilience in a challenging economic and competitive environment,” he said.

The results come following a difficult period for Domino’s, which saw sales cool last year amid Brexit fears and as the weak pound squeezes household finances.

Steve Clayton, manager of the Hargreaves Lansdown Select UK fund range, commented: “Domino’s is trading well, right across its estate, with positive like for likes everywhere from Iceland to Switzerland and especially back home in the UK. Profit for 2017 is now expected to be a little ahead of the market’s range, suggesting something of the order of £92m is likely.

“The company is doing what is has always done; focusing on the consumer and serving them with a great product, straight to the door with the minimum of fuss.”

“Domino’s dominates the UK pizza sector and can throw more marketing resources behind the brand than any rival can hope to. The group set a new record for store openings last year and looks set to continue opening at pace in the UK and overseas.

“Normally, Domino’s leads the pack in terms of technology, and much of its success can be put down to being the early mover in takeaway e-commerce. But introducing GPS technology to maximise delivery efficiencies and customer service has been an area where it lagged. So it is good to see Domino’s catching up here, with almost a quarter of the estate adopting GPS in 2017.”