Domino's Pizza Enterprises
Domino’s Pizza Enterprises (ASX:DMP) is Australia’s only publicly-listed pizza company and is the master franchisor for the Domino’s Pizza brand in Australia, New Zealand, France, Belgium and The Netherlands.
Domino’s and its franchisees have 748 stores across five countries, employing more than 16,000 part-time and full-time staff and making more than 50 million pizzas each year.
Domino's Pizza Sales seen benefitting despite economic conditions
Sales for Australia's biggest pizza chain are ahead of expectations and more stores will be opened despite the economic slowdown. Another 40 to 50 stores would be added to the group, which already operates 749 outlets. Group Same Store Sales growth was 6.8% over FY07. Net Debt was reduced to A$15.9m. Gearing was down to 16.6% (Net Debt to Capitalisation).
During the year Domino's added 78 stores across Australia, New Zealand, France, Belgium and The Netherlands including 36 in Europe and 27 Pinky’s Pizza stores in Australia.
Online Ordering Strong Trend
In all Domino's markets, online ordering initiatives will be boosted and France will be moving to online ordering within the next six months. During 2007/08 online ordering became a significant part of Domino's business and is an area it will continue to focus on and develop. Online ordering has recently increased to more than 13.5% of sales in Australia. The Netherlands has also recorded some impressive increases, tracking in excess of 19.2% of all orders are placed online.
Domino's hopes to double that over the next two to three years with new websites.
Domino's net profit in the last financial year increased 36 per cent to $12.4 billion based on revenue of nearly $230 million. Another 78 stores were added to the group in the year to June 30, with 27 of those coming from the acquisition of the Pinky's chain mainly based in Victoria. Domino's faces competition from Pizza Hut and Eagle Boys.
Outlook for 2009
While it is likely Domino's will be impacted in the current tight credit, in terms of lending for store growth, there should also be some benefits from current conditions:
• Pizza still remains an affordable meal for families as people shift from eating out to ordering in
• An easing in the labour shortages that we have seen in recent years will mean Domino's can staff stores more effectively
• The recent weakening of the Australian Dollar will aid earnings results in Europe and New Zealand.
On the cost side, input prices of wheat are dropping. Domino's expects the price of wheat and cheese will decrease in the second half of 2008/09 as contracts are renegotiated. Domino's European market is already benefiting from lower commodity prices.
Domino’s Pizza’s sales are ahead of expectations and we are recording positive same store sales growth in all markets.
It has forecast that net profit will grow this financial year by 10 to 15 per cent to between $13 million and $13.6 million.