Shares in pizza franchise operator Domino’s Pizza (DOM) hit a new all-time high on Tuesday after reporting a 28% jump in first half pre-tax profit.

News that the company would also be extending its share buyback programme saw the stock rally 3.4% to 436p.

Like-for-like system sales were 19.3% ahead of last year, aided by reduced value added tax but even excluding the tax benefit system sales grew 5.5% compared with 4.8% in 2020.

Today’s strong update put to bed any fears that post lockdown trading would be impacted as consumers took the advantage to eat out.


Importantly, orders returned to growth with second quarter growth of 13.5%, as collections recovered and are back to 75% of pre-pandemic levels.

A successful media campaign ‘Domin-oh-hoo-hoo’ encouraging families and friends to reunite post lockdown and the delayed Euro’s boosted demand with the company seeing record trading during the England Scotland game.

Total system sales were up 19.6% to £752.4 million while underlying pre-tax profit grew 27.7% to £60.8 million in the 26 weeks to 27 June, reflecting reduced VAT and lower Covid-19 related costs.

Strong cash generation resulted in net debt to EBITDA (earnings before interest, taxes, depreciation, and amortisation) falling to 1.36 times which is below the lower end of the normal range of 1.5 times-to-2.5 times.


Consequently the company announced an additional £35 million share buyback on top of the existing £45 million and to pay an interim dividend of 3p per share.

In total, the company has announced £136 million of capital to be returned so far in 2021 including dividends and share buybacks. This represents around 9% of the company’s market cap at the beginning of the year.

Domino’s said the second half had started well but expected lower system sales growth as VAT increases take effect, although it said this would have ‘limited flow-through’ to profitability.

Numis analyst Richard Stubber has increased his full earnings per share by 6% to 20.1p, reflecting the enhanced buyback, adding, ‘Domino's medium-term strategic plan to grow system sales to £1.6-1.9bn though an additional 200 stores and an acceleration in collection and deliver is highly achievable.’


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Issue Date: 03 Aug 2021