17th Jun 2020 09:49
(Alliance News) - Domino's Pizza Group PLC on Wednesday said it expects earnings for the first half of 2020 to be lower than a year prior.
The FTSE 250-listed pizza delivery chain - which is holding its annual general meeting on Wednesday - said that while sales in the UK increased year-on-year, changes made to its operations in UK and Ireland during the lockdown period has resulted in higher costs.
From December 31, until June 14, like-for like sales were up 3.7%, driven by an increased order count. However, Ireland recorded a weaker performance as sales fell by 5.9%. Domino's said that while the UK operation benefited from an increased order count during lockdown, Irish business suffered from weak consumer spending generally.
Domino's Pizza said changes implemented - such as re-routing all store deliveries to stop two-person deliveries, ensuring all stores are closed during restocking, changing its supply chain shift patterns, paying salary premiums and purchasing contact-free boxes and facemasks - has meant that it has incurred "considerable" costs.
Therefore, it expects earnings before interest, taxes, depreciation, and amortization to be slightly lower year-on-year. For comparison, underlying Ebitda for the 26 weeks ended June 30, 2019, was GBP52.4 million.
Sales performance in Domino's Pizza's remaining international operations - Sweden, Switzerland and Iceland - were mixed during the Covid-19 period, with sales in Switzerland particularly hurt by the temporary closure of a number of stores.
The company said it has now completed the sale of its operations in Norway, adding that the Norwegian business had incurred operating losses for a number of years. As part of the sale, the company is now the full owner of Domino's Sweden.
Full first-half results will be published on August 11.
"I joined the group at a time of unprecedented trading conditions and have spent my first few weeks as CEO becoming fully immersed in the business," Chief Executive Officer Dominic Paul told the company's AGM on Wednesday.
Paul joined as CEO in April, replacing David Wild. Paul was chief executive of coffee chain Costa Coffee from 2016 to 2019. Costa was owned by Whitbread PLC but sold to Coca-Cola Co in 2019.
"I am proud of the performance of our system during this period, and that the vast majority of our stores have remained open," he said.
Shares in Domino's were trading 8.2% lower at 311.19 pence each on Wednesday morning in London.
By Ife Taiwo; [email protected].
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