Domino’s shares fall despite rising in UK and Ireland

Domino’s has warned of a loss in its international business this year, sending shares in the pizza delivery firm lower and eclipsing a rise in first-quarter group sales.

“Internationally, performance remains disappointing and trading visibility is limited,” said chief executive David Wild, adding that the company would tighten its focus on international costs and capital deployment.

Shares fell 3% to bring them down almost 28% in the past year, which values the London stockmarket-listed company at £1.16bn (€1.35bn). The UK and Ireland account for 90% of its business and helped power a 4.5% rise in group sales to £324.4m for the first quarter to the end of March. Sales for the UK and Ireland rose 4.8% to £299.3m.

However, the company has been focusing on its online and overseas businesses where it is struggling to control costs, especially in Norway. International sales fell 2% to £25.1m, Domino’s said, as it began cutting costs and spending in operations that also include Sweden, Switzerland, Germany, Luxembourg, and Iceland.

The company has also been negotiating with international franchisees. Analysts have said the investment in its international operations run into hundreds of millions of pounds, while the business has not made money.

“DOM’s track record overseas is not good; if it cannot run these countries profitably, then other master franchisees may think they can do better,” said Peel Hunt analysts.

It cut its 2019 pretax profit forecast by £5m, assuming its international operations lose £6.4m versus a previous loss forecast of £1.4m.

Reuters