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Britain’s Domino’s Pizza sees profit ahead of view

Britain’s Domino’s Pizza sees profit ahead of view
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First Published: Wed, Jan 05 2011. 02 31 PM IST
Updated: Wed, Jan 05 2011. 02 31 PM IST
London: Britain’s biggest pizza delivery firm Domino’s Pizza UK & IRL Plc said it expected its 2010 pretax profit to beat market forecasts following a strong finish to the year, sending its shares to an all-time high.
Domino’s, which operates the British and Irish franchises of the global delivery brand, has excelled through challenging economic conditions as cash-strapped customers opt to stay in and order takeaways rather than eating out.
Offers such as a buy-one-get-one free deal on Tuesdays and its “one two free” deal on a large pizza, such as its Mighty Meaty, plus side orders of garlic mozzarella sticks and other items had proved popular, the company said.
Domino’s, which opened 57 new stores over the year and has 665 outlets, said on Wednesday sales at shops open more than a year grew by 10.3% in the 13-week to 26 December.
“We have again finished the year with a like-for-like sales performance that is ahead of expectations and, together with the improvements in our operational gearing, the company will deliver 2010 profits ahead of current City expectations,” said Domino’s chief executive Chris Moore.
The strong performance came despite heavy snowfall across Britain throughout December. Two of Britain’s biggest retailers reported a drop in sales in the run-up to Christmas on Wednesday, sparking fears bad weather compounded a tough environment for consumers.
Domino’s said total sales increased by 17.8% in the fourth quarter to 132.5 million pounds ($206.1 million). For the year as a whole, they were up 19.2% to 485.3 million pounds.
The company’s online business grew sales over the year by 63% to 128 million pounds, boosted by the introduction of an iPhone ordering app, and increased promotional activity on social media websites such as Facebook and Twitter.
E-commerce accounts for around 36% of Domino’s overall sales in Britain.
Shares in the company, which have more than trebled in value over the last two-year, opened up 2.7% to hit an all time high of 571 pence, but fell 0.6% to 555.9 pence by 02:15 pm. The FTSE All Share index was down 0.3%.
“Not even mentioning snow, Domino’s has had a storming Q4. This company is one of the best managed marketing-led operations in the UK today and a core holding for any consumer-facing investment portfolio,” said Peel Hunt analyst Paul Hickman.
Peel Hunt, which has a “buy” recommendation on the stock, lifted its 2010 pretax profit forecast by 3% to 37.8 million pounds.
Altium Securities raised its full-year pretax profit forecast to 37.7 million pounds from 36.5 million pounds previously, and increased its target price on the stock to 650 pence from 575 pence while retaining a “buy” recommendation.
Numis, which also advises clients to “buy”, upgraded its 2010 pretax profit forecast by 1.2 million pounds to 37.7 million.
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First Published: Wed, Jan 05 2011. 02 31 PM IST