Pre-Close Trading Update

RNS Number : 4571I

Domino's Pizza Group PLC

03 July 2013

 



03 July 2013

DOMINO'S PIZZA GROUP plc

Quarter Two Pre-Close Trading Statement

13 weeks to 30 June 2013

Domino's Pizza Group plc ("Domino's", "the Company", " DPG" or "the Group"), the leading pizza delivery company with stores in the UK, Germany, Republic of Ireland and Switzerland, today announces its pre-close trading update covering the 13 weeks to 30 June 2013 ("the period") unless otherwise stated.

United Kingdom

The Company has continued the strong momentum established in quarter one with system sales rising by 11.7% to £147.6m (2012: £132.2m). Like-for-like sales were also strong, running at 6.1% (2012: 8.1%) for the quarter, and 6.4% (2012: 5.7%) for the first half. These results are particularly pleasing as they come on top of very strong comparatives from last year, highlighting the underlying strength of the core UK business.

E-commerce continued its outstanding performance, now accounting for 63.3% (2012: 52.4%) of UK delivered sales for the first half. This figure is expected to rise further as the Company continues to develop its in-house web and digital marketing expertise and launches the latest version of the website in the second half. These actions will result in even better communication with our customers, an ever easier customer journey through the ordering process and greater efficiency at the back end of the online and Apps ordering system.

Domino's continues to open new stores across the UK - in both new and existing locations - with 10 opened during the quarter (2012: 13), making a total of 15 (2012: 19) in the first half of the year. As in 2012, the store opening programme is heavily weighted towards the second half of the year and the Company anticipates opening a comparable number of new stores to last year.

International

System sales in the Republic of Ireland have risen by 5.1% to €12.1m (2012: €11.6m) and the market has just seen its sixth month of positive like-for-like sales growth, leading to growing confidence that this market is now heading into clearer waters. Like-for-like sales for the second quarter were up a robust 4.9% (2012: 2.5%) and the first half like-for-like run rate is 6.5% (2012: 2.9%).

Switzerland continues to perform well, with system sales of CHF3.3m and like-for-like sales rising by 6.2% in the quarter and 7.8% for the first half of the year. The planned closure of two poorly located stores has been completed during the period, but these will be relocated over the next 12 months. The stores are operationally greatly improved, team members have now been trained to Domino's exacting standards and a new menu, new marketing and strong in-store team dynamics are reaping rewards. The Company has also rolled out Pulse, the Group's new EPoS system, to all stores. This re-launched market is showing great potential. There are several stores still to be relocated and new ones to be opened - but the early progress is extremely encouraging.

The two year old German business has generated system sales of €2.4m (2012: €0.7m) and like-for-like sales in a small number of stores that are now mature (six stores) are growing fast with sales increasing by 11.1% for the quarter and 23.8% for the first half, albeit from a lower AWUS. In particular, there is strong progress being made by the franchised stores, which are running above budgeted AWUS.

During the period, three stores were opened in Germany (2012: four), taking the half-year total to seven (2012: four). Another 12 stores are expected to open during the second half.

Just as they did in the early days of our UK operations, our corporate stores in Germany have played a key role in helping us develop our products and services in a new market. However they significantly lag the performance of the franchised stores and, by contrast, are running below budget. This, coupled with additional training costs, means that losses in Germany for the year as a whole are expected to be £2m to £3m more than originally anticipated. Due to the superior performance of the franchised stores we will transition the majority of our corporate stores across to franchisee management as soon as practicable, which should enable their full potential to be realised. This mirrors our strategy in the UK a decade ago and only a small number of training stores will be retained. This transition will involve some additional one-off costs of which more details will be provided at the time of our interim results on 30 July 2013.

Lance Batchelor, Chief Executive Officer, commented: "I am very pleased with the overall results for the first half - particularly with regards to the UK and Ireland like-for-like sales. Our system leads the leisure sector and, with the majority of our business coming via web and mobile platforms, we are now truly an online retailer.

"In Germany, as in the UK, our franchisees run great stores. Corporate stores have allowed us to test menus, develop marketing plans and understand the German consumer - but now that the ground work is done, it is time to drive our German expansion using our tried and tested franchise model. We know the best way to get great results from stores is to put them in the hands of franchisees - and with five world-class franchisees now operating stores in the German market and more arriving shortly, we are excited about the future in this fledgling territory."

-Ends-

For further information, please contact:

Domino's Pizza:

Lance Batchelor, Chief Executive Officer                      01908 580604

Lee Ginsberg, Chief Financial Officer                             01908 580611

MHP:

Tim McCall, Simon Hockridge, Naomi Lane                  020 3128 8789 

Numis Securities Limited:

David Poutney, James Serjeant                                         020 7260 1000

Notes to Editors:

Domino's Pizza Group plc is the leading player in the fast-growing pizza delivery market and holds the exclusive master franchise to own, operate and franchise Domino's Pizza stores in the UK, Republic of Ireland, Germany, Switzerland, Liechtenstein and Luxembourg. The first UK store opened in Luton in 1985 and the first Irish store opened in 1991. In April 2011, the Group acquired a majority stake in the exclusive master franchise to own, operate and franchise Domino's Pizza stores in Germany. In September 2012, the Group acquired the master franchise for Switzerland, Luxembourg and Liechtenstein and an option to acquire the Master Franchise Agreement in Austria prior to the end of 2014.

As at 30 June 2013, there were 825 stores in the UK, Republic of Ireland, Germany and Switzerland. Of these, 634 stores are in England, 51 are in Scotland, 33 are in Wales, 20 are in Northern Ireland, one is on the Isle of Man, three are mobile units, 48 are in the Republic of Ireland, 25 are in Germany and 10 are in Switzerland.

Founded in 1960, Domino's Pizza is one of the world's leading pizza delivery brands. Through its primarily franchised system, Domino's Pizza operates a global network of more than 10,000 Domino's Pizza stores in 75 international markets. Domino's Pizza has a singular focus - the home delivery of pizza, freshly made to order with high quality ingredients.

Customers in the UK can order online at www.dominos.co.uk, in the Republic of Ireland at www.dominos.ie, in Germany at www.dominos.de and in Switzerland at www.dominos.ch. In addition, mobile customers can order by downloading Domino's free iPhone, iPad and Android apps.

 

END

 

 

TSTNKBDDOBKDQOK