The British subsidiary Domino’s Pizza Group (LON:DOM) has slid into stocks as second quarter orders continued.
The first 1.8% increase in the first quarter of 2020, resulting in a 11.3% decline in total orders in the second quarter compared to the previous year, followed by a 6.0% decline in the third quarter.
The immersion of these orders was led by the significant shrinkage of collection-based orders. Delivery orders rose 2.5%, 22.4% and 11.8% in three quarters, but the collection was flat, but then fell considerably at 87.2% and 41.5%.
In more positive news, UK Domino announced that it opened five new stores in the third quarter and 13 in the previous year.
He added that online sales growth was 35.6% for the UK business and 18.0% for the Republic of Ireland. In the UK, online orders currently account for more than 95% of shipping sales and more than 68.5% of UK and ROI collection sales, adding that it is up from 45.8% year-on-year.
In the supply chain, Domino’s said the supply operational service level is still available and accurate at 99.9%, and construction of the Scottish facility is on track. However, the joint-related costs in the supply chain that enables social distancing are around £2 million.
Domino’s Pizza Group wants to implement a balanced strategy
Speaking about the outcome and the company’s strategic outlook, CEO Dominic Paul commented.
“We are pleased to report strong performance in the third quarter. Delivery orders increased by 11.8%, and we also benefited from the reopening of our collection business. We are pleased with the agility demonstrated by the group and our franchisees to maintain our momentum. We welcomed the UK government’s cuts to VAT in mid-July, giving franchisees the opportunity to ease costs and hand over their savings to our customers.”
“We are working closely with our franchisees to continue doing everything we can to keep people and customers safe, including wearing masks, using perspex screens, free delivery and contacts, collections and ongoing menu rationalization. It is a privilege to serve our open and local community and we are confident that we have an operational plan in place to adapt to the various levels of lockdowns that may occur in the coming months. We are grateful for the dedication and effort we have to make to our Domino team throughout our system.”
“We continue to work on a long-term strategic plan for our business. At the heart of our future plans is the reorganization with our franchisee partners, and we continue to expect these discussions to take some time, but we have detailed discussions agreeing to sustainable ways to come. Despite the ongoing background of uncertainty, we look forward to reporting the underlying group PBT yearly, ranging from £93 million to £98 million, in line with market consensus.”
Investor’s Notes
Following the news, Domino’s Pizza Group stocks fell 8.82% or 32.81p to 339.19p, 15/10/20 13:18 GMT. This is 7.3% above the target price 315.00pa share, but a marked drop from the 372.00pa share from the year-end highest seen on October 14th.
The company currently has an AP/E ratio of 21.24, slightly below the consumer circulation average of 26.34. Analysts have a consensus “sell” stance on the company’s stock, but the MarketBeat community gives it a 50.91% “outperform” rating.
