Investors believe pizza delivery chain Domino’s Pizza (DOM) is half-baked as like-for-like sales growth slows in the 13 weeks to 25 September. The company also warns of challenging comparatives, although it remains confident that full-year results will meet market expectations.
Sales in the UK have increased by 3.9%, although this is lower compared to 14.9% over the same period in 2015, triggering a share price drop of 6.4% to 348.7p.
Domino’s reports strong trading in the UK, with system sales up 10.5%, which was driven by continued investment in its digital platform and 21 new store openings.
Its digital channels are proving a success with over 81% of delivered sales being delivered online with 64% placed through the app or mobile website in the year to date.
Numis recognises the marked deceleration when compared to 14.9%, but notes this growth was weather-related and maintains its ‘buy’ recommendation. The broker has raised its pre-tax profit guidance by 1% to £83.4m for 2016.
Higher numbers of digital ordering and Ireland’s growing economy have boosted like-for-like sales by 7.6%. However, this is smaller growth compared to 14.1% over the same period in 2015.
Overall system sales are up 11.5% from £212.6m to £237m.
In Switzerland, life-for-like sales are flat as the company was unable to offer carry-out due to local licensing issues in two stores, although this is expected to be resolved soon.
Stores in Iceland and Norway continue to perform strongly as system sales have increased by 17.5% and 124.8% respectively, driven by expansion in these countries. Domino’s expects to launch its first store in Sweden before the end of the year.