The popularity of the X Factor may be waning, but Simon Cowell’s Saturday night talent show still helped Domino’s Pizza Group PLC (LON:DOM) to deliver a strong finish to 2017.
The pizza delivery giant sold £321.8mln worth of pizzas, dough balls and cookies in the three months to December 24 – a year-on-year jump of 18.2% (Q4 2016: £272.4mln).
Strong growth both at home and abroad
Even when stripping out the impact of new stores and currency movements, the FTSE 250 group still recorded like-for-like growth of a shade over 10%.
The X Factor Final on December 2 was “the catalyst” for Domino’s biggest day of sales during 2017, the company said, with sales up 25% compared to the average Saturday across the year.
International sales – although still a small part of the overall group – continue to grow strongly, climbing to £27.1mln from just £4.6mln in the same period a year earlier.
READ: Domino’s hints at full-year profits beat after strong Q3
Revenues in Norway more than doubled, largely due to the acquisition of Dolly Dimple’s earlier in 2017, while Switzerland saw sales rise by almost a quarter on a constant currency basis.
In the Iceland business – in which Domino’s has just snapped up an additional 44.3% stake – sales were up 6.4% year-on-year.
Despite a “challenging” environment and rising competition, Domino’s core UK market also performed well, with sales up 10.1% to £294.7mln (Q4 2016: £267.8mln) – much of that was organic growth, too.
2017 underlying profits to be “slightly above” forecasts
The good performance in the final few months of 2017 backed up a similarly strong showing in the prior quarter. As a result, Domino’s told investors it expects full-year underlying profit before tax for 2017 to be “slightly above” current market expectations.
“We are pleased to report a good performance in Q4, completing another year of significant progress and growth for Domino's,” said group chief executive David Wild.
“With a record year for new store openings and continued like-for-like sales increases, the UK business has demonstrated its resilience in a challenging economic and competitive environment.
“Our international operations are growing in scale and benefiting from our expertise in supply chain and digital.”
‘Changing consumer habits benefitting Domino’s’
“Domino’s Pizza beat forecasts in the final quarter as more people stayed in on Saturday nights in front of the box,” said ETX Capital analyst Neil Wilson.
“Changing consumer habits which have powered Just Eat to the FTSE 100 are supportive of Domino’s, although it didn’t always look this way.
“Shares were off sharply at the beginning of 2017 as same-store sales growth seemed to have peaked, while rivals like Just Eat were surging ahead.
“But like-for-like sales growth is now back in the double digits and the outlook is much healthier with volume growth more than offsetting a squeeze on margins.
“Q4 performance was ahead of expectations and with good volume growth offsetting slighter weaker margins.”
Shares were up 3% to 361.1p early on Tuesday.
--Updates for share price and analyst comment--