Domino’s Pizza still Delivering on Time
City Index July 23, 2012 3:50 PM
<p>Domino’s Pizza continues to be an investment favourite after the fast food pizza chain reported like for like sales growth of 5.2% for the first […]</p>
Domino’s Pizza continues to be an investment favourite after the fast food pizza chain reported like for like sales growth of 5.2% for the first half of the year, compared to a sales growth of 2.4% a year earlier.
Overview of results:
- Like for like sales growth for the group 5.2% (UK sales +5.7%)
- Profit before tax, excluding Germany, increased 15.2% to £23.3m
- Diluted Earnings per Share (EPS), excluding Germany, increased 16.1% to 10.68p
- Interim Dividend +20% to 6.60p per share
The results themselves help to confirm that Domino’s has taken advantage of a number of factors that increased its customer base and sales, namely austerity and sporting occasions. With the UK now back in a double dip recession and anaemic earnings growth, diners are increasingly choosing to eat in and Domino’s has clearly benefitted from this changing social variable.
The recent EURO 2012 international football tournament has likely helped the firm also, and one can expect that the launch of the London 2012 Olympic Games will also benefit sales too.
Are these results of any surprise however? Perhaps not.
It doesn’t take a rocket scientist to come to the conclusion that when consumers have less disposable income and have restricted spending habits, firms such as Domino’s I likely to take advantage.
But it is not just the economic environment that has benefitted the pizza chain.
Innovations have also helped to increase the speed of purchase. The firm said that online system sales rose 43.4%, accounting for 52.4% of all UK delivered sales and of those online purchases, 17.9% of orders were completed via a mobile device.
Share price outperformance
Domino’s shares price has rallied a rather superb 26% so far in 2012, which is a significant outperformance of other firms in the restaurant/bars sector.
Shares have now hit the top end of its long term trading range at 520p, and it is indeed this level where shares have sold off from this morning so this week’s performance will need to be watched for any signs of a reversal.
Consistent closes above the 520p level is going to be important for upwards momentum to continue to help prices target a new record high above 591p.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.