DOMINO’S Pizza yesterday reported that it enjoyed a strong first quarter, thanks to its new stuffed crust products and a jump in takeaway orders during the recent chilly weather.
The group, which runs the British, Irish, German and Swiss franchises of the global delivery brand, said total sales rose 12.3 per cent to £164.1m in the 13 weeks to 31 March.
Like-for-like sales across its 670 established UK stores increased 6.6 per cent, beating analyst expectations and sending shares up six per cent yesterday.
The pizza seller had a slow start to the year after 498 stores – almost two-thirds of its UK portfolio – were forced to close at some point in January because of the heavy snow.
But Domino’s said trading rebounded thanks to customers feasting on new products such as the Domino’s hot dog stuffed crust and taking advantage of short-term promotional deals.
Lance Batchelor, Domino’s chief executive, said. “New product launches, a relentless focus on service, industry leading digital and online technology, an ever growing marketing budget, and a healthy pipeline of new sites are just some of the ways we continue to drive this terrific business forward.”
The group will open another 60 stores in the UK this year and double its number in Germany to 36. Domino’s has said it sees its German business eventually outgrowing its British arm and expects it to be profitable by the end of 2015.
Batchelor said despite tough comparatives in the second quarter and rising food costs to overcome, he expects trading for 2013 to remain in line with market expectations.
Analyst Views | Are Domino’s shares as appetising to investors following the update?
NICK BATRAM | PEEL HUNT
After a relatively lacklustre first few weeks of the year, the quarter finished strongly. New products and the continued growth of e-commerce continues to provide encouragement, as does the momentum in European markets. Since the recent share price weakness, the stock has moved into buying territory.
SIMON FRENCH | PANMURE GORDON
Domino’s has reported 6.6 per cent UK like-for-like sales growth for the 13 weeks to 31 March ahead of our expectations of around three per cent...But the group faces a very challenging second quarter like-for-like comparative of 8.1 per cent reflecting last year being the wettest second quarter on record.
PATRICK COFFEY | LIBERUM CAPITAL
Trading was stronger than expected. The business model and cash generation is not in doubt but the rating is expensive relative to history and there have been no upgrades for two and a half years. There remains a risk of negative like-for-likes in second quarter which would weaken investor sentiment.