Domino’s shares in freefall as pizza giant dishes | Australian Markets
Shares in Domino’s Pizza have been in freefall after the fast-food giant revealed hefty restructuring prices associated to mass store closures had delivered a $22.2 million loss within the first half of the financial 12 months.
The loss stood in stark distinction to a revenue of $57.8m a 12 months in the past because the company was smashed by $115.6m in one-off prices, with impairments on company-owned shops to be closed making up the lion’s share at nearly $81m.
Different one-off prices included $11.3m in writedowns on belongings, land and buildings, in addition to $6.6m in restructuring prices.
Shares within the company — which has more than 3700 shops throughout Australia, New Zealand, Europe and Asia — plummeted 10.5 per cent to $28.89.
Earlier this month, new chief govt Mark van Dyck made his first main transfer within the function after taking on from long-serving boss Don Meij by saying the closure of 205 loss-making shops — 172 are within the Japanese market.
On the time, Mr van Dyck conceded the company grew too rapidly, with many of the shops focused for closure opened during the pandemic, fuelling a surge in gross sales. These shops have since struggled as demand declined and prices and inflation soared.
“At our recent trading update we announced the first outcomes of a detailed operational and financial review to create a simpler and better Domino’s, including taking decisive actions to close loss-making stores and deliver savings to reinvest in growth,” Mr van Dyck mentioned on Tuesday.
“Those steps were the first in a comprehensive business review, which is ongoing, designed to improve profitability, strengthen franchise partnerships, and position the business for long-term sustainable growth and improved shareholder returns.”
Mr van Dyck later advised analysts it wasn’t about a “change in strategy, but a change in execution”.
“Some of our markets simply aren’t delivering at the same level as our top markets are showing,” he mentioned.
“There is no doubt consumers are under pressure globally with sustained cost-of-living pressures affecting (quick service restaurants) broadly.
“But where we’re getting the customer proposition right, we’re growing share, including in large markets such as Australia.”
Mr van Dyck mentioned store closures in Japan “do not reflect and should not be interpreted as a statement of our long-term opportunity to grow, including new store openings”.
Domino’s reported income of $1.17 billion, down 6.4 per cent, whereas pre-tax earnings fell 6.7 per cent to $100.6m.
Its Australian and New Zealand division delivered earnings growth of 7.6 per cent to $67.7m. However this was offset by challenges in Europe and Asia, the place earnings fell 11.1 per cent to $32.3m and 19 per cent to $17m, respectively.
Mr van Dyck mentioned the business nonetheless had important growth alternative.
“There are a number of key priorities, putting the consumer at the centre and simplifying to deliver quality every time,” he mentioned.
“Nothing is off the table and we are considering where is the right place to invest capital to make sure we get maximum shareholder returns.”
Domino’s declared an unfranked interim dividend of 55.5¢ a share, unchanged from final 12 months.
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