Pizza take out box with Domino's logo on map of US
Domino’s agrees tie-up with delivery platform Uber / Image source: Adobe
  • Sales and profit above estimates
  • Upgraded medium term targets
  • Slower-than-hoped start to 2024

Despite delivering better-than-expected full-year revenue and profit and raising its long-term growth targets, shares in franchised pizza chain Domino’s Pizza (DOM) fell 6% to 344.6p on a lukewarm outlook.

Over the last year the shares are up by around a third and comfortably ahead of the mid-cap FTSE 250 index’s 4% return.

For the 52 weeks to 29 December, system sales increased 5.7% on a like-for-like basis leading to group revenue 11% higher at £679.8 million, slightly above consensus estimates of £669 million.

Underlying EBITDA (earnings before interest, tax, depreciation, and amortisation) increased 3.6% to £138 million, above of the top-end of the guided range.


Chief executive Andrew Rennie commented: ‘In December I set out a framework for accelerating sustainable, long-term growth.

‘Following a great year for store openings in 2023 we are accelerating our growth and expect to have 1,600 UK & Ireland stores delivering £2.0 billion of system sales by 2028 and 2,000 stores by 2033 delivering £2.5 billion of system sales.

‘We are committed to a progressive dividend policy and I'm pleased that we have increased the dividend by 5%. This is a highly cash-generative, asset-light business and we have been able to announce £427m of shareholder returns since March 2021, whilst also continuing to invest in the business.

pizza mealDomino's expects to meet full year profit expectations

Investors chose to focus on current trading and the outlook for 2024, where the company flagged a ‘slow’ January partly due to ‘tactically’ holding back marketing spend to support strategic launches later in the year.

Consequently, the company expects first quarter like-for-like sales to be lower than the prior year although management is ‘confident’ of delivering full-year growth.

The group expects 2024 EBITDA to be in line with company-compiled consensus of £148 million.


Shore Capital’s Bradley Hughes and Greg Johnson said they do not expect to upgrade 2024 forecasts because they sit in the middle of the consensus range.

‘That said, in our view, the company’s guidance today does appear conservative given the store pipeline is building more quickly than we forecasted (SCM FY24F est. 51 net new sites) at over 70 new additions in FY24F and implied EBITDA margin YoY on company complied guidance is effectively flat,’ added the analysts.

AJ Bell investment director Russ Mould said: ‘There were undoubtedly positives in Domino’s latest results. It seems to have left the damaging battles with existing franchisees behind it for now and the company has put in place some ambitious medium-term targets.

‘However, plans to increase the number of sites raise the question of saturation point in a UK market which is well served by both Domino’s and rival pizza and broader takeaway options. The danger, which has spooked the market before, is that new stores cannibalise the sales of existing sites.’

Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (Ian Conway) own shares in AJ Bell.




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Issue Date: 12 Mar 2024