TIDMDOM

RNS Number : 1288T

Domino's Pizza Group PLC

10 October 2017

10 October 2017

Q3 Trading Update

Improved trading; digital engagement growing

 
                                                         13 weeks           13 weeks        Change          Change 
                                                  to 24 September    to 25 September    % reported    % organic(1) 
                                                             2017               2016 
==============================================  =================  =================  ============  ============== 
 Group system sales                              GBP286.4m          GBP237.0m          20.8%         11.9% 
==============================================  =================  =================  ============  ============== 
 
 UK & ROI system 
  sales                                          GBP261.6m          GBP233.3m          12.1%         11.7% 
==============================================  =================  =================  ============  ============== 
 
        *    UK LFL sales growth excl. splits    8.1%               6.2% 
==============================================  =================  =================  ============  ============== 
 
        *    ROI LFL sales growth                13.1%              7.6% 
==============================================  =================  =================  ============  ============== 
 International system 
  sales                                          GBP24.8m           GBP3.7m            -             25.1% 
==============================================  =================  =================  ============  ============== 
 

Q3 Highlights

   --     Group system sales up 20.8%: broad-based uplift 
   --     UK system sales up 11.6% and UK LFL sales growth up 8.1% 
   --     Acceleration in digital: UK online sales up 17.4% 
   --     1,149 stores groupwide; 19 new stores opened in the period, including 1,000(th) UK store 

-- Strong operational and commercial progress in international markets, as we convert the Dolly Dimples stores and enjoy the benefits of majority ownership

   --     London franchisee joint venture creates a platform for faster growth and innovation testing 
   --     GBP15m buyback announced in addition to GBP20m of share purchases completed in H1 

David Wild, Chief Executive Officer, said:

"We are pleased with our performance in Q3, especially the improved trend in our core market of the UK. Additionally we are making progress in all our overseas operations. In Ireland and Switzerland, our online initiatives are fuelling accelerated growth, and in Norway the first Dolly Dimple's conversions are trading very well.

"In the UK, consumers are uncertain and they continue to focus on value. Our commitment to growth remains undiminished, as does that of our franchisee partners. We expect to launch a record 90 stores in the UK this year, with an encouraging pipeline already in place for openings in early 2018. More recently, we have seen a real surge in digital engagement, with our new advertising campaign, "The Official Food of Everything", driving a record 200,000 online orders - or 140 a minute - on the last Saturday in September. The Board reaffirms that its forecasts for full year underlying profit before tax remain at least in line with market expectations."

(1) Organic growth represents year-on-year performance on a constant currency basis and excluding the impact of acquisitions or disposals.

UK & ROI

Demand for delivered food in the UK continues to be strong despite the uncertain consumer environment. UK and ROI system sales were up 12.1% in the quarter, or 11.7% excluding currency effects. UK system sales were up 11.6%, an improvement on H1, supported by the record store opening programme and a recovery in like-for-like sales. We opened 18 new UK stores in the period, taking the 2017 total to 58. We are confident of reaching our 90 unit opening target for the full year, and already have good visibility of the pipeline into Q1 of next year. During the quarter we opened our 1,000(th) UK store, in Overton, and by the period end we were trading from 1,008 stores.

UK like-for-like sales, which exclude stores in split territories, were up 8.1%. The impact from donor stores on system sales was (2.1)%. The improved year-on-year growth rate over H1 is partially due to a weaker comparable period in Q3 last year, with the two year trend remaining broadly consistent with H1.

Online participation continued to grow, supported by our ongoing investment in digital platforms. Online sales were up 17.4% and now represent 75% of UK system sales. We began the roll-out of GPS, with 64 stores active at the period end and over 200 due to be operational by the end of the year.

Towards the end of September, we introduced a new nationwide pricing campaign, "Dine for GBP9.99", which offers customers any pizza for GBP9.99 when they buy two or more. This is being supported by the "The Official Food of Everything" Campaign.

During the quarter we acquired a 75% interest in a London franchisee business comprising 25 stores. The venture gives us a platform for accelerated growth in the most important market in the UK, and we expect to increase the store portfolio from 25 to around 40 over the medium term.

ROI system sales were up 13.1% on a constant currency basis, with like-for-like sales up 12.9%. This performance has been driven by very strong growth in digital participation, with online sales up 30.9% and now representing 58% of total sales. We opened our first new store in the country for 6 years, taking the total store count to 48.

International

Switzerland achieved constant currency system sales growth of 25.1%, with like-for-like growth of 20.4%. Sales accelerated strongly as the reduction in menu prices made during H1 drove a significant uplift in volumes. Online sales were up 69.6% and are now 61% of total sales.

In Iceland, where we are the clear market leader and average weekly unit sales are higher than anywhere else in the Domino's worldwide system, constant currency system sales were up 7.4%, and like-for-like sales were up 4.0%.

In Norway, pro forma system sales growth from the Domino's store base was 84.0%, with like-for-like growth of 14.6%. The integration of Dolly Dimple's and the conversion of stores continues in line with our plan. We have franchised out 5 Domino's stores and the franchisee has already opened a sixth.

In Sweden, where we launched in November 2016, we have 3 stores trading and continue to be pleased with initial progress. We have 3 further stores under construction.

Outlook and guidance

Progress in Q3 has been encouraging and we look forward to realising the effects of our recently-launched campaign. Despite the continued uncertainty affecting the UK, we are investing in growth and the customer proposition for the long term. We now expect full year capex to be at the lower end of the GBP50-60m range, and we anticipate full year underlying profit before tax at least in line with current market expectations.

For further information, please contact:

For Domino's Pizza Group plc:

Peregrine Riviere

07909 907193

Maitland:

James Devas

020 7379 5151

Conference call and webcast

We will be hosting a conference call and audio webcast, supported by slides, at 09:00 this morning. The call can be accessed by dialling +44 20 3059 8125, and the password is Domino's. The call will also be webcast via the following link: http://www.investis-live.com/dominos/59cd0400ba5a870c002eaebc/bvdx

This information is provided by RNS

The company news service from the London Stock Exchange

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