Mamma mia it’s been a rough year for the pizza purveyors. Up until early June it things were looking pretty good, with the stock rising from an opening price of £3.46 to a 15 month peak of £3.91. Yet since then it has all gone horribly wrong.
On June 12th investors was shocked by the abrupt departure of chief finance officer Rachel Osborne, its 3rd CFO in 3 years. This can be seen as the point that investors started to sour on the stock, with it continuing to fall in the subsequent weeks. Things were then exacerbated by August’s interim results – more on those below – with the fast food firm still unable to stall its decline. Domino’s Pizza Group PLC now sits at a current trading price, and 13 month low, of £2.69.
For the 26 weeks ending 1st July the company reported it had seen a 12.8% rise in group system sales to £616.6 million, with a World Cup-boosted 5.9% surge in UK like-for-like systems sales (excluding impact of split territories) compared to the 2.4% rise seen the year previous.
However, this meant little to investors in light of a 9.7% decline statutory pre-tax profit to £41.7 million. Its international expansion was blamed for the drop, with CEO David Wild stating that it had taken the company ‘some time to refine the operating model and cost base at store level, particularly in Norway’.
In terms of Thursday’s Q3 update, investors will want to hear that the company has started to get those aforementioned costs under control, especially since Wild said it is ‘confident’ that the changes it has made ‘will result in a better performance in H2’. A continuation of the half year’s perky like-for-like sales growth would also be welcome.
Domino’s Pizza Group PLC (LON:DOM) has a consensus rating of ‘Hold’ alongside an average target price of £3.85.
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