Q3 Trading Statement

RNS Number : 4067E

Domino's Pizza Group PLC

18 October 2018

 

LEI: 213800Q6ZKHAOV48JL75 

18 October 2018

Q3 Trading Statement

Good progress on store openings; additional £25 million share buyback

	13 weeks to 30 September 2018	13 weeks to 24 September 2017	Change % reported	Change % organic1
Group system sales (£m)	£303.3m	£286.4m	5.9%	6.0%
UK & ROI system sales (£m)	£277.3m	£261.6m	6.0%	6.1%
-      UK LFL sales growth	2.2%	-
-      ROI LFL sales growth	3.3%	-
International system sales (£m)	£26.0m	£24.8m	4.8%	5.8%

Q3 Highlights

·     Group system sales up 5.9%: continued growth in all markets

·     UK system sales up 6.1% and UK LFL sales up 2.2%

·     Good operational progress in international markets

·     1,236 stores group-wide; 23 new stores opened in Q3, including 20 in the UK

·     Stores to hire 5,000 additional Christmas colleagues to provide great service to customers

·     £50m share purchase programme completed; further £25m to commence immediately, taking year end net debt into our 1.75 - 2.5x net debt/EBITDA target range

·     Full year Underlying PBT expected to be in the middle of the range of market expectations²

David Wild, Chief Executive Officer, said:

"Our businesses continue to trade well, despite the evident uncertainty among UK consumers, and hot weather across Europe for much of the quarter. I'd like to thank our franchisees for their ongoing commitment to the development of the Domino's brand, with the opening of a further 20 stores in the UK this quarter; we are confident of reaching 60 stores for the year. In our international operations, we are making good progress on refining the operating model and cost base, and we expect Group Underlying Profit Before Tax for the 2018 year to be in the middle of the range of market expectations. In addition, given the strength of our balance sheet and the highly cash generative nature of the business, the Board has approved a further £25m of share buybacks, to commence immediately."

¹ Organic growth represents year-on-year performance on a constant currency basis and excluding the impact of acquisitions or disposals.

² Market expectations for Underlying PBT for 2018 are £93.0m - £99.6m based on company-gathered estimates from 9 analysts in September 2018

UK & ROI

UK and ROI system sales were up 6.0% in the quarter, despite some impact from the continued hot weather for much of the period. In the UK, system sales rose 6.1%, with like-for-like growth, excluding stores in split territories, of 2.2%. Like-for-like order volume growth was (1.4)% and ticket growth was 3.6%, driven mainly by a 3.1% increase in items per basket. From mid-September, we have repeated last year's highly successful "Dine for £9.99" national campaign.

Online sales in the UK were up 11.4% and represented 78.3% of total sales during the period. GPS is now live in 603 UK stores, leading to much more efficient labour management and an enhanced customer experience.

Our franchisees made excellent progress on store openings, with a further 20 opened in Q3, making a total of 42 new stores year-to-date. 28 different franchisees have opened at least one store so far this year, continuing the trend of broad-based growth. We continue to expect around 60 openings for the full year.

Volumes in our new Warrington supply chain centre continue to ramp up in line with plan, and by the period end we were delivering to 281 stores from there. The consultation at our facility in Penrith is complete and we plan to exit the site in March 2019. The non-underlying charge resulting from this decision, the significant majority of which is non-cash, is expected to be approximately £6m in H2. The consolidation to two main supply chain centres enhances our service to franchisees, supports growth and creates a more efficient platform.

ROI system sales were up 5.2% on a constant currency basis. Like-for-like sales, excluding stores in split territories, grew 3.3%, and we opened our 50^th store in July. GPS is live in 15 stores.

International

We continue to be very excited about the long term potential in our international businesses. These markets all share attractive dynamics, with strong customer demand and relatively low penetration by international pizza brands. We are making good progress as we further refine the operating model in each market.

Overall system sales growth in our controlled international operations was 5.8% on a constant currency basis, and we expect the profit outcome across International (including Germany) to be around breakeven for the full year.

Switzerland achieved constant currency system sales growth of 4.6%, with like-for-like performance of (2.7)% reflecting a very strong performance in the prior period. Growth was negatively affected by temporary planning restrictions on our two most recently opened stores in Geneva, which we expect to resolve shortly. We now have our strongest ever pipeline of new openings in Switzerland, and a strengthened management team with significant real estate and Domino's operational experience.

In Iceland, constant currency system sales were up 4.6%, with like-for-like growth of 0.6%. We expect to open a further two stores in Q4, taking the total to 25 - in Domino's Iceland's 25^th year of operation. Iceland continues to achieve record sales per store performances despite the lowest population per store of any major Domino's market.

In Norway, we now trade from 38 Domino's branded outlets, adding a further four stores during the period. System sales growth in local currency from the Domino's chain was 125.5%. Like-for-like performance of (3.1)% reflects the impact of persistent warm and dry weather, and increased store density as we build scale in Oslo. The labour cost overruns experienced in H1 are now under control and we expect reduced losses in the second half of the year.

In Sweden, constant currency system sales in our seven stores were up 69.9%. Having established a strong presence in Malmo, we are planning to launch in Gothenburg in the coming months with a series of store openings. We have recently appointed a new country manager with significant experience in the QSR sector, and continue to strengthen the local management team.

In Germany, progress on the conversion of Hallo Pizza outlets has been very positive and we continue to build nationwide scale under the Domino's brand.

Share repurchase programme

Domino's Pizza Group plc (the "Company") announces that it will today commence a programme to purchase up to £25 million of the Company's ordinary shares of 25/48 pence each.

The Company has entered into an agreement for its broker Numis Securities Limited to carry out purchases of its Ordinary Shares under the Buyback Programme on its behalf.  The purpose of the Programme is to reduce the Company's share capital and accordingly the Company intends to cancel the Ordinary Shares purchased under the Programme. The share repurchases will be carried out on the London Stock Exchange and will be effected within certain pre-set parameters and in accordance with both the Company's general authority to purchase its Ordinary Shares granted by its shareholders and the Market Abuse Regulation 596/2014 ("MAR"). The programme will be ongoing, and any purchases of its shares made by the Company under the programme will be effected in accordance with the Company's general authority to repurchase shares, Chapter 12 of the UKLA Listing Rules and relevant conditions for trading restrictions regarding time and volume, disclosure and reporting obligations and price conditions.

For further information, please contact:

For Domino's Pizza Group plc:

Peregrine Riviere
07909 907193

Maitland:
Clinton Manning

020 7395 0473 or 07711 972662

Sam Cartwright
020 7395 0415 or 07827 254561

About Domino's Pizza Group

Domino's Pizza Group plc is the UK's leading pizza brand and a major player in the Irish market. We hold the master franchise agreement to own, operate and franchise Domino's stores in the UK, the Republic of Ireland, Switzerland and Liechtenstein. In addition, we have a controlling stake in the holders of the Domino's master franchise agreements in Iceland, Norway and Sweden, as well as associate investments in Germany and Luxembourg.

 

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