Domino’s Pizza PLC, the UK’s leading Pizza business, has issued its trading update for the period from 29 June 2015 to 27 September 2015, and updates its outlook for the year.
The Group delivered a very strong set of results for the period building on the already successful first half. UK LFL sales rose 14.9% in Q3, 14.1% in the Republic of Ireland, 14.2% in Germany and 5.3% in Switzerland.
Douglas Jack at Numis comments:
“Q3 trading is ahead with UK LFL sales up 14.9%, resulting in an 11.8% increase over the first nine months. We are upgrading our forecasts by 5%, having increased them by 3% after the interim results. We now forecast PBT rising 24% over the full year, with UK LFL sales rising 10.5%. We are upgrading our target price to 1100p from 1000p.”
Commenting on the results, CEO David Wild said
“We are delighted by this performance as our UK business goes from strength to strength, reflecting the success of our strategic and marketing initiatives. It represents the eighth consecutive quarter of double digit like for like sales growth as we continue to focus on delivering great food with great service, using our best in class digital platforms.
“Our international businesses also continue to show encouraging signs of improvement.
“We enter the final quarter of the year with good momentum, are confident of beating our previous expectations for the full year and remain excited about our longer term growth prospects.”
Trading
Trading in the core UK business was particularly robust driven by continued investment in digital, now focussed on mobile. Revenue through digital channels was 35% ahead of Q3 last year and more than 75% of delivered sales in the year to date have been online, with more than half of these placed through the app on android or IOS devices.
During the third quarter, where Domino’s offline media spend has traditionally been low, there was also benefit from the ongoing sponsorship of Hollyoaks which enhanced brand saliency and drove revenues.
Sales were also helped by relatively poor weather during the summer months.
During the period 12 new stores were opened in the UK bringing the total year to date to 33. The Group remains on course to open a minimum of 50 stores in the UK during 2015.
Encouraging third quarter results in Ireland where there is also an increasing trend towards digital ordering and the benefits of the continued economic recovery.
In Germany and Switzerland the Group has continued to focus its efforts on improving service to enhance store level performance. Whilst the results are encouraging there still remains a lot to do to improve the overall performance of these businesses.
Outlook
Given the strong performance of the business in the third quarter and a solid start to the fourth quarter, the Board expects full year results to be ahead of its expectations.