Domino's Pizza (US) Shares Rise 10% on Growth Plans for UK and Ireland
11 Mar 2021 - Domino's Pizza Group is appointing a chief executive for the Republic of Ireland for the first time as part of an international growth plan for when the Covid-19 restrictions are finally behind it.
The company taps the bulk of its sales from Britain and Ireland and posted sales that held up reasonably well during the pandemic-hit 2020. It operates almost 1,150 stores in the UK and has 54 outlets in the Republic.
Domino's has, however, faced struggles with international operations and this week announced plans to sell up in Sweden. The group has also gone through a long period of bickering with its franchisees in Britain and elsewhere, which it now hopes to put behind it.
The London-listed shares climbed 10% to value the firm at £1.46bn (€1.7bn), as it looked beyond the pandemic.
In Britain, the strategy involves it having staff deliver pizza to customers' cars.
Significant health costs
Domino's posted an underlying group profit of £101.2m, up by £2.4m from 2019, highlighting the significant health costs of Covid of £9m for franchises to stay open during the pandemic. Net debt fell sharply to £171.8m at the end of December.
It said it generated revenues from the UK of £478.3m in 2020, little changed from £480.6m in 2019.
In Ireland, it had revenues of £26.8m, down slightly from £27.7m in the previous year. It also owns the so-called master franchise agreement for Iceland, Switzerland and Norway, which also delivered significant contributions in the year.
Domino's said that as part of its international growth plans, it is creating a new CEO post "to focus on growth" in the Republic of Ireland and expects to complete the first stage of plans to open a supply chain facility in Naas in Co Kildare at the end of the year.
'A weaker performance'
"Our business in Ireland [compared with the UK] is a much smaller part of the group and we saw a weaker performance particularly in Q2 as the Ireland lockdown had a more pronounced impact on consumer spending," it said.
A sharp cut in the Vat rate for takeaway hot food in the UK has helped its franchisees absorb some of the additional costs in dealing with the health crisis, it said.
“As the economy begins to reopen, we have invested in our capabilities to enable us to capitalise on the substantial opportunities ahead," group CEO Dominic Paul said.