Online Sales Surge for Domino’s Pizza, Global Markets Gaining Traction

Management were optimistic about the future. Online sales grew nearly 12 percent in the half.
Online Sales Surge for Domino’s Pizza, Global Markets Gaining Traction
An image of a Domino's delivery bike in Albany, Western Australia on Feb. 21. (Susan Mortimer/The Epoch Times)
Monica O’Shea
2/20/2024
Updated:
2/20/2024
0:00

Domino’s Pizza profits fell 13 percent in the first half of the 2024 financial year, but online sales rose nearly 12 percent.

The pizza chain’s share price rose nearly 4 percent on the Australian Stock Exchange (ASX) on Feb. 21, despite the profit fall compared to the prior corresponding half.

An investor presentation (pdf) shows Domino’s recorded a $62.3 million (US$40 million) net profit after tax (NPAT) in the first half of 2024, down 13 percent on the $71.7 million reported in the first half of 2023. However, profit was 22.3 percent higher than the second half of 2023.

The Breakdown

Domino’s reported that total network sales grew 8.8 percent on the prior corresponding half to $2.1 billion. In addition, online sales surged 11.8 percent to $1.7 billion in the first half of 2024, when compared to the first half of 2023.

Earnings before interest and taxes (EBIT) fell 5.3 percent to $107.9 million compared to the prior corresponding half.

The company’s dividend fell 17.7 percent on the prior corresponding half to 55.5 cents per share, down from 67.4 cents per share.

This dividend will be paid to eligible shareholders on March 27, with an ex-dividend date of Feb. 26.

Domino’s reported to the market that it has started to rebuild sales, earnings, and franchise profit across its local and international operations.

The Domino’s share price is up nearly 3.61 percent at the time of writing to $41.03. In the past year, Domino’s shares have descended 42.5 percent. In earlier trade on Feb. 21, Domino’s shares surged 4.8 percent to $41.58.

The company also provided a trading update for the first seven weeks of the second half of the 2024 financial year. Network sales have grown 3.78 percent, while same-store sales have risen 2.96 percent.

There have been seven new store openings in this time frame compared to 15 in the prior corresponding period.

The company has achieved $21 million of total savings in the first half of 2024 as part of the company’s restructuring plan.

Domino’s Rebuilding: CEO

Group CEO and managing director, Don Meij, said the results on Feb. 21, show Domino’s rebuilding and its sales initiatives in Australia and New Zealand were gaining traction internationally.

He said the results also show more work is required to get the same results in all 12 of the company’s markets, which include Japan, Singapore, France, Germany, and The Netherlands.

“The fundamental strategies underlying our business remain unchanged: getting closer to customers helps deliver a hotter, fresher meal for our customers and reduces costs for our franchise partners,” Mr Meij said in a release.

“The past 12 months have reinforced the importance of launching inspired new products, designed for delivery, to give customers more choice on more occasions—whether it’s a family bundle, a lunchtime offering, or an on-the-go snack.

“Our approach is unchanged; the difference in our performance across markets is our execution.”

The Performance Overseas

Mr. Meij signaled more work is required to strike the balance in some of the company’s international markets, including France.

He noted trading conditions are challenging in Asia, but the company has seen improvement in Japan, including sales growth in the first seven weeks of 2024.

Despite navigating “record inflation” impacting customer spending choices, Domino’s said it has been working in all markets to grow weekly customer counts and franchise partner profits in the company.

In the Australia and New Zealand markets, Domino’s said more than half of its stores boosted trading hours to meet lunchtime and late-night order demands. This is especially true in the case of delivery via Domino’s service or Uber.

The company said delivery growth had “more than offset” a decline in carry out-orders. This week, the company launched a $5 or less range in Australia and New Zealand.

In the European market, Domino’s is placing a major focus on France, where delivery orders are now growing. However, there has been a fall in carry-out, cutting the company’s customer counts.

The Japanese market was the largest in Asia, where customers have grown with successful promotions. Other Asian markets had a “mixed performance.”

Singapore has been delivering more growth since the company implemented the online ordering platform One Digital.

However, the Malaysian business is experiencing headwinds at the moment, which Domino’s described as temporary, due to “geopolitical issues.”

Germany is the leader for Domino’s within the European region, with delivery sales growing and advertising spending moving from TV to digital channels.

What is Ahead?

Domino’s is undertaking a wide-ranging company restructuring plan that is expected to deliver $50 million in savings in the 2024 financial year. One-third of these savings will be provided to franchise partners.

Looking ahead to 2024, the company’s CEO said Domino’s would implement a “proven strategy” to rebuild weekly customer counts, and franchise partner profit.

“As we work to serve our customers across different countries, cultures, and taste preferences, our customers share a common desire for high-quality meals, delivered fast, at an affordable price. We believe Domino’s is well placed for this future, and we will work hard to deliver,” he said.