Domino's Pizza delivers solid Q3 despite hot weather

2nd Oct 2013 07:29

Trading at Domino's Pizza was resilient despite the adverse effects of the hot weather this summer, with the company's growing exposure on-line bolstering top-line growth, though it was forced to scale back it store-opening targets after some delays.Nevertheless, Chief Executive Lance Batchelor said the firm is confident in meeting City expectations for the full year.The pizza delivery chain reported 10.4% growth in UK system sales in the third quarter (13 weeks to September 29th) to £140.9m, up from £127.6m the year before. This was a slight slowdown from the 13.8% growth seen in the first half due to an "extended period of unusually warm weather". Year-to-date system sales from its 750 stores in the UK were up 11.1% at £437.9m.Like-for-like (LFL) growth in the third quarter from its 669 mature stores was 4%, below the 6.4% growth registered in the first half. However, analysts were expecting lesser LFL growth in the region of 2.5-3.0% in the third quarter.Online sales continue to grow strongly, up 19.8% at £72.3m, and now account for 62.4% of UK delivered sales, from 58.4% at the same time last year. Mobile sales have also risen sharply and have more than doubled over the year- these account for 29.3% of total online sales.A new store design put in place earlier in the year has pushed back the opening schedule in the UK, meaning that just eight stores were opened during the third quarter, bringing the year-to-date total to 23. After previously having estimated a similar number of store openings as 2012 (69), the company now reckons the full-year figure will be closer to 50.InternationalOverseas, the company reported LFL growth in the Republic of Ireland, Germany and Switzerland, though rates did slow-down somewhat from the first half due to the warm weather across Europe.LFL growth in Germany, a key growth market for the company, slowed to just 9.4% from 23.8% in the first half. However Domino's said that it is in progress of transitioning the majority of its corporate stores to franchisee management as soon as possible - as announced in the interim results - and is confident that a "good proportion" of these will be transferred by the year end."I am pleased to report another quarter of solid LFL sales growth across all four of our markets. The introduction of our excellent new store design meant a delay in first-half store openings, but the programme is now well underway," Batchelor said."We are making good progress in transferring our German corporate stores across to franchisees, which will be a significant step forward in the evolution of this new growth market."