--updates share price, adds broker comment--
Polish Domino's Pizza franchisee DP Poland (LON:DPP) has served up a 35% increase in full-year sales and is eyeing up new store openings in the eastern European country this year.
The firm, which currently runs 12 stores across Warsaw and Krakow and six-sub franchises in the capital, said sales reached £3.96mln in 2014 – up from £2.9mln the year before.
It means the pizza-delivery business has now had nine consecutive quarters of double digit like-for-like sales growth and Peter Shaw, chief executive said the business is hungry to open more stores in 2015.
“There are five cities in Poland with a population of at least 500,000, and 39 towns and cities of at least 100,000 people.
“With this population base and the increasing urbanization of Poland we believe that there is significant potential for expansion,” said Shaw.
Based on Shaw’s assessment of population, the growing Polish consumer economy and the development of Domino's in other markets, Shaw believes that the long term potential for Domino's Pizza in Poland is at least 300 stores.
The largest pizza chain in Poland has over 200 stores.
Early signs suggest 2015 will be another strong year of progress for DP Poland.
Like-for-like system sales, which include total sales from corporate and franchised stores, are up 18% in January and 17% in February.
The retail estate was EBITDA (underlying earnings) positive for each month of the last quarter of the year, while in 2014 overall the group lowered its full-year EBITDA loss by 15% to £2.4mln
“We have a compelling consumer offer, strong operations and effective marketing, as assessed by our franchisor, DPI, and as such we anticipate 2015 to be another year of significant progress,” said Shaw.
Broker Peel Hunt said it has always been confident Poland had the right ingredients for a successful Domino’s Pizza roll-out.
"It was largely a question of how long it would take to achieve, and how much capital would be required," said analyst Nick Batram.
"After a tough few years, 2014 looks like being a point of inflection for DP Poland and this has rightly been reflected in the share price.
"There is still much to do, but we believe the risk profile has reduced and this leads us to upgrade our fair value to 35p."
The broker expects the group to hit breakeven at the EBITDA level in 2018.
Shares edged up to 24p in early deals this morning.