Domino’s shares down on weak results, lowered EBITDA outlook

Investing.com — Shares of Domino’s Pizza (NYSE:) Group PLC (LON:) dropped on Tuesday after the company released its interim results.

At 4:56 am (0856 GMT), Domino’s Pizza Group PLC was trading 6.2% lower at £290.

For the first half of 2024, Domino’s reported revenues of £326.8 million, falling short of expectations, a 1.8% decrease from the previous period. 

“With lower supply chain revenue offset by increased corporate store revenue post the acquisition of Shorecal,” said analysts at RBC Capital in a note. 

The company also reported an underlying EBITDA of £69.0 million, which accounts for approximately 46% and 47% of the full-year consensus estimates of £713.6 million and £147.8 million, respectively. 

This was below the guided range provided by the company.

Same-store sales growth (LFL) excluding split store impacts came in at -0.5%, while overall orders were down by 0.9% compared to the first half of 2023. Collection orders grew by 2.4%, but delivery orders declined by 2.6%.

Despite the challenging first half, Domino’s reported a positive trend in Q2 with orders increasing by 0.6% and delivery orders rising by 1.1%. 

July saw a significant rebound with total orders up by 5.8%, partly driven by the Euros. The company has also opened 22 new stores in the first half of the year, bringing the total to 26 year-to-date, though this falls short of the annual target of 70.

“The pick-up in trade in July is encouraging, with the group expecting to deliver growth in order count and LFL sales for the FY,” RBC added. 

Domino’s has announced a new £100 million issuance of 5.97% USPP notes due in 2034, which is expected to be at a lower rate than the company’s existing revolving credit facility.

Additionally, the company has initiated a £20 million buyback program and completed the disposal of its London stores for £35.1 million.

Domino’s expects the earlier closure of the Shorecal acquisition to contribute about £5 million to the full-year underlying EBITDA. 

The company has indicated that, factoring in this contribution and passing on lower food costs to franchisees, the underlying EBITDA is anticipated to be at the lower end of market expectations, which range from £144.3 million to £149.2 million.