Bad weather hampers Domino's Pizza after strong 2012

Monday 25 February 2013 15.32
Domino's Pizza says Irish market continues to be tough
Domino's Pizza says Irish market continues to be tough

Domino's Pizza said heavy snow hit its UK sales at the start of 2013, after surging online demand helped to lift annual profit 11%.

The firm operates the British, Irish and German franchises of the global delivery brand.

It said its pre-tax profit for the year to December 30 was £46.7m, up 10.8% on 2011, and in line with forecasts.

The group said it sold 61 million pizzas last year, up from 56 million in 2011. 

Domino's promotions and popular online ordering service have struck a chord with cash-strapped consumers opting for cheaper nights in over more expensive meals out.

Store openings, online demand, new stuffed-crust products and a busy summer of sporting events all helped sales at UK shops open more than a year rise 5% in 2012, up from 3.7% growth a year earlier, the firm said. Group sales rose 13% to £598.6m.

It said that its stores in Ireland saw like-for-like sales in the mature stores up 3.9% over the first seven week reporting period. The company noted that while Irish sales are 31% down from the peak in 2007, only one of its 49 Irish shops has closed.

Domino's said its Irish e-commerce business continues to grow at a strong rate and is now at 30.4% of all delivered sales, up 20.2% year on year.

But it said that Ireland continues ''to be a very tough trading environment''. Domino's said it has worked closely with its Irish franchisees during the last year and it said it was ''really impressed with their tenacity''.

Domino's said online sales now made up 55.7% of UK delivered sales, up from 44.3% the year before. Almost 20% of those orders came via mobile devices, it added, with demand in general being driven by more targeted marketing on social media forums like Facebook and Twitter.

"We are almost a digital business now," chief financial officer Lee Ginsberg said, adding that in one recent week a dozen of its stores had received over 80% of their delivered sales online.

Bad weather and heavy snow had hit progress at the start of 2013, the firm said, with 498 UK stores forced to close at some point during the first seven weeks of the year.

School holidays also took place later this year compared with 2012, slowing underlying UK sales growth to 1.6% in the period, compared with a 3.8% rise in 2012.

The group, which opened a record 69 shops in 2012 to take it to 805 stores, has been expanding in Europe, acquiring franchise rights to operate in Germany, Switzerland, Luxembourg and Liechtenstein. It also has an option to open in Austria in 2014.

Long term, Domino's sees its German business growing to twice the size of its British arm and said it would double the number of stores there this year to 36, as well as adding another 60 in the UK.

It expects to be profitable in Germany by the end of 2015. The group said some German stores in Dsseldorf and Cologne had been making €18,000 a week recently, well ahead of its expectations and better than the £5,000 its UK stores were making at the same early stage.

Keywords: domino's pizza