Domino’s Pizza reported Q1 Group system sales up 4.5% but the international business remained weak, with the company announcing that it no longer expects to break even this year. The news slices 5% off the share price in early trading to 247p.
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International system sales were up 1.1% in local currency, below the Q4 2018 rate of 1.5%, with the company describing the result as disappointing and blaming limited trading visibility. Switzerland was particularly weak, reporting like for like sales down 8.4%.
Sales in Norway were below expectations down 1% in local currency, prompting management to announce a turnaround plan starting in Q3 with the benefits expected to materialise from Q4.
A small bright spot was Sweden, where sales improved 15.6% in local currency driven by three new store openings.
Even within the traditionally strong UK business, the healthy pipeline of new stores has been impacted by ongoing franchisee discussions. As Russ Mould, Investment Director at AJ Bell, commented, “The issue of its deteriorating relationship with its franchisees is likely to constrain any expansion plans on these shores”
The shares are trading on a forward price to earnings multiple of 14 times and offer a dividend yield of 4.8%, at the upper end of the range over the last five years.
