H1 2018 Trading Update

RNS Number : 0932V

DP Poland PLC

19 July 2018

 

DP Poland plc

("DP Poland" or the "Company")

H1 2018 Trading Update

System Sales up 38%. Like-for-likes 13%. 77% of delivery sales ordered online.

·     38% increase in System Sales¹ H1 2018 on H1 2017

·     13% like-for-like² growth in System Sales H1 2018 on H1 2017

·     77% of delivery sales ordered online

·     59 stores in 26 towns and cities to-date

·     5 new stores opened in H1 2018

·     6 further leases already signed and a number of stores under construction

Peter Shaw, Chief Executive of DP Poland said:

"System Sales grew 38% in the first half of the year as a result of double digit like-for-like sales growth and sales from non-like-for-like stores (those opened within the last 12 months). This robust growth was achieved in spite of unseasonably warm weather in May and June, warm weather tending to suppress home delivery sales. Balancing the warm weather, from the middle of June the World Cup supported sales as football fans ordered delivery pizza while watching matches on TV; the Poland matches generated particularly high sales.

The proportion of sales ordered online continues to grow and, at 77% of all delivery sales ordered online, Poland is one of the leading Domino's markets worldwide for online sales. Online ordering is not only very popular with our customers, it is a highly cost-efficient channel to operate.

Healthy growth in Poland's consumer economy has encouraged competitive activity as food delivery aggregators and direct pizza delivery competitors have been investing in both marketing and store openings, consequently the Polish home delivery market is showing significant growth³, as witnessed in many other markets.  Domino's Pizza is well positioned in Poland to take long-term advantage of this market growth, through its focused proposition to deliver consistently great tasting, freshly made hot pizza, fast, time after time after time, the fundamental reason why Domino's Pizza became the world's number one pizza chain⁴ by system sales in 2017.

Following our record number of store openings in 2017 (19 stores opened) we are focused in 2018 on balancing store openings with growing the sales and EBITDA performance of our immature stores. We expect a store to take 12-18 months to reach breakeven and at the beginning of 2018 more than a third of our corporate store estate was less than 12 months old and two thirds less than 24 months old. As the proportion of immature stores reduces, relative to the overall estate, we expect to see a positive impact on Group EBITDA. In this context we have opened 5 corporate stores so far this year and have a pipeline of 6 store leases already signed, with a target of 10+ store openings by the year end, representing c.20% growth in the total store estate 2018 on 2017. As well as corporate store openings we are in discussions with both existing and potential sub-franchisees on opening more sub-franchised stores this year.

Our new commissary in Łodz is operating very effectively as it nears it first anniversary, producing growing volumes of dough and distributing growing volumes of ingredients to stores, alongside our Warsaw commissary.

Gross profit margins in both store and commissary P&Ls were boosted in H1 by price deflation in the European cheese market, margin benefits that we share with our sub-franchisees. The price of cheese is material because it accounts for a significant proportion of the food cost of pizza.

We intend to announce our interims results for the six months ended 30 June 2018 on 18 September." 

¹ System Sales - total retail sales including sales from corporate and sub-franchised stores, unaudited.

 ² Like-for-like growth in PLN, matching trading periods for the same stores between 1 January and 30 June 2017 and 1 January and 30 June 2018

³ Source: Euromonitor 2018

⁴ Domino's Pizza worldwide sales in 2017 $12.2bn. Pizza Hut worldwide sales in 2017 $12.03bn. Source: Ad Age 20 February 2018

Enquiries:

DP Poland PLC Peter Shaw, Chief Executive www.dppoland.com	020 3393 6954
Peel Hunt LLP Adrian Trimmings / George Sellar	020 7418 8900

Notes to editor

DP Poland, through its wholly owned subsidiary DP Polska S.A, has the exclusive right to develop, operate and sub-franchise Domino's Pizza stores in Poland. There are currently 59 Domino's Pizza stores, 33 corporately managed, 2 under management contract and 24 sub-franchised.

 

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