Domino’s suffer ‘growing pains’ in global business
Domino’s Pizza is to report full-year profits at the lower end of expectations following “growing pains” in its international business, particularly in Norway.
The pizza delivery company expects full-year underlying pre-tax profit to be at the lower end of the consensus range of £93.9 million to £98.2 million, following weaker international sales and business integration challenges in Norway.
Like-for-like sales in Norway declined 6.4%, with the company blaming unseasonably warm and dry weather and delivery headwinds as it converted Dolly Dimple’s stores. The company said the integration of the two Norwegian operations it bought in 2017 was “more complex and challenging than expected”.
As a result of the weaker sales and the integration problems, Domino’s expects the international business to book a loss of £3 million to £4 million for 2018.
David Wild, chief executive, said: “Our international businesses offer significant long-term potential, but we have experienced growing pains this year, particularly in Norway, where we have faced business integration challenges”.
However, the company posted robust numbers for the UK and Ireland business where it had its busiest week ever in the run-up to Christmas, with sales up 6.2% in the fourth quarter to £312.9 million.
In the UK, system sales rose 6%, with like-for-like growth of 4.5%.
Group system sales rose 5.5% to £321.8 million, but for the international business systems sales declined 2% to £26.6 million.
Domino’s Pizza expects continued growth in the UK and Ireland this year, and the international business to break even in 2019.
Mr Wild said: “I’m pleased with the continued strong performance in the UK and Ireland, where we opened a further 59 stores.
“Many families decided to kick off the festive season with a Domino’s, with the Friday before Christmas breaking all records as we sold more than 535,000 pizzas - equivalent to 12 every second.”
He added: “The UK delivered food market is vibrant and we estimate that it will grow at a compound rate of 8% a year to 2022. We aim to maintain our share of this market.”