Domino's Pizza Group sees third quarter growth amid hot weather, UK uncertainty

Domino’s Pizza Group updated the market on its third quarter trading on Thursday, reporting 5.9% growth in group system sales for the 13 weeks ended 30 September to £303.3m, with an organic growth rate of 6.0% for the period.

The FTSE 250 company, which is the master franchise for US brand Domino’s Pizza in the United Kingdom, Ireland, Germany, Switzerland, Liechtenstein and Luxembourg and holds minority interests in the master franchisees for the brand in Iceland, Norway and Sweden, said it saw continued growth in all markets during the quarter.

UK and Republic of Ireland system sales were up 6.1% to £277.3m, with UK like-for-like sales up 2.2% and RoI like-for-like sales 3.3% higher.

The firm reported “good” operational progress in international markets, ending the quarter with 1,236 stores across the group after 23 new store opening in the third quarter, including 20 in the UK.

Stores were to hire 5,000 additional Christmas colleagues to “provide great service” to customers, the company said.

A £50m share purchase programme was completed, with a further £25m to begin immediately, taking year-end net debt into the firm’s 1.75x - 2.5x net debt-to-EBITDA target range.

Full year underlying profit before tax was expected to be in the middle of the range of market expectations.

“Our businesses continue to trade well, despite the evident uncertainty among UK consumers, and hot weather across Europe for much of the quarter,” said chief executive officer David Wild.

“I'd like to thank our franchisees for their ongoing commitment to the development of the Domino's brand, with the opening of a further 20 stores in the UK this quarter; we are confident of reaching 60 stores for the year.”

In its international operations, Wild said the company was making “good progress” on refining the operating model and cost base, and it expected group underlying profit before tax for the year to be in the middle of the range of market expectations.

“In addition, given the strength of our balance sheet and the highly cash generative nature of the business, the board has approved a further £25m of share buybacks, to commence immediately.”