Irish austerity cuts take a bite out of Domino’s Pizza as growth slows

 
City A.M. Reporter
Britain’s biggest pizza delivery firm Domino’s reported slower sales growth, hit by a slump in trade in Ireland, sending its shares down 9.3 per cent yesterday.

The company, which operates the British and Irish franchises of the global delivery brand, said sales at its 608 shops open more than a year grew by 4.2 per cent in the 13 weeks to 30 March, compared with a 4.7 per cent increase in the first seven weeks.

Domino’s, which operates 672 shops in Britain and Ireland on a franchise basis, said its overall performance had been dragged down by falling sales in Ireland where an EU bailout, record austerity measures and a prolonged downturn have severely hit consumer confidence.

“The company’s total like-for-like figure is increasingly affected by the performance of the Republic of Ireland stores, where trading conditions have continued to deteriorate,” Domino’s, which has 48 shops in Ireland, said in a statement.

Sales at shops in the UK open more than a year grew by 5.5 per cent during the period, with sales at shops in Ireland open for more than a year dropping by 10.5 per cent.

Shares in Domino’s, which have lost a quarter of their value since January having trebled in value over the previous two years, closed down 9.3 per cent at 404.6p, having earlier been as low as 394.9p.

“A check in like-for-like sales growth has been exacerbated by negatives in Ireland and the VAT increase,” said Peel Hunt analyst Paul Hickman, who downgraded the stock to “hold” from “buy”.

Domino’s has so far benefited from the downturn, with customers staying in and ordering takeaways rather than eating out in restaurants.