Broker snap: Poor sales in Ireland leads to Domino's downgrade

30th Mar 2011 14:03

Peel Hunt downgrades pizza chain Domino's Pizza to 'hold', from 'buy', after slowing like for like (LfL) sales have been exacerbated by negatives in Ireland and the VAT increase.LfL sales were up 4.2% in the first quarter, implying that the 4.7% seen in the first seven weeks slowed to just 3.6% in the final six weeks.The broker said that the weakness is substantially caused by trading in Ireland (which accounts for 7% of sales), which saw a LfL decline of 10.5%. The UK was flat at 5.5%."The opportunity for upgrades now looks diminished", said analyst Paul Hickman, as it seems like that company may not again achieve the double-digit annual LfL growth that it has averaged over the last five years.The target price is slashed by a quarter to 445p, from 600p.BC