The opening of 40 new stores helped boost sales at Domino’s Pizza Group PLC (LON:DOM) by 10.5% to £546.5mln in the first half, though like-for-like growth was a pedestrian 2.4%, prompting a 3% fall in the share price.
Underlying profit for the takeaway giant, which will soon boast its 1,000th store, grew by 9.1% to £44.6mln, suggesting an increase in costs.
Showing signs of a business approaching maturity, the group said it spent £20mln on share buybacks, while the interim payout is poised to grow 7.1% to 3.75p. The return of cash usually denotes a company running out of options to invest in growth.
The company, valued at just shy of £1.4bn, has around £61mln of debt, which equates to 0.6-times operating profit.
The shares, down around a quarter in the last year, have been hit by a series of downgrades with heavyweight broker Citi the last to weigh in, querying Domino’s premium rating in the fast-food sector.
Anaemic growth
The Square Mile’s number crunchers are worried about the slowdown in the pizza giant’s underlying growth rate.
The anaemic 2.4% is slightly better than the company’s last update, but is still unlikely to enthuse a sceptical City audience.
Domino’s described its first half showing as “strong” against a “more uncertain economic environment”.
"Whilst we acknowledge that our UK consumers are currently more cautious about the economic outlook, we're focussing on growth investment with our franchisees; boosting marketing; improving customer engagement and enhancing our leading position in food delivery,” said chief executive David Wild.
“Pizza remains the world's most popular delivered food, and Domino's is the top choice for consumers."