Domino’s plunges 14% on guidance cut, flat orders in first half results

Investing.com -- Domino’s Pizza Group (LON:DOM) shares sank more than 14% on Tuesday after the UK-based company cut its full-year earnings guidance and reported flat order volumes for the first half, as franchisees delayed store openings amid increased costs and weaker trading conditions.

The fast food pizza delivery chain now expects underlying EBITDA for fiscal year 2025 to be between £130 million and £140 million, around 8% below the midpoint of consensus estimates. The company-compiled consensus was £146 million, while Jefferies had forecast £149 million.

Underlying EBITDA for the first half declined 7.4% to £64 million. Revenue rose 1.4% to £332 million, and total system sales increased 1.3% to £778 million. 

However, like-for-like system sales, excluding store splits, fell 0.1%. Second-quarter like-for-like sales dropped 0.7%, following a 0.5% increase in the first quarter.

Total (EPA:TTEF) order volumes remained flat during the first six months of the year, with delivery orders down 0.6% and collection orders up 1%. Within the second quarter, delivery declined 2.6%, while collection increased 2.9%.

Franchisee EBITDA fell 5% to £77,000, reflecting a 13% margin. The decline came despite only one quarter being impacted by higher wage costs. 

Domino’s opened 11 new stores year to date and now expects store openings in the “mid-20s” for the full year. 

The previous guidance called for more than 50 new stores, with Jefferies projecting 60 and consensus estimates at 49.

The company reported modest market share gains. Its share of the overall UK takeaway market rose 0.2 percentage points to 7.2%, while its share of the UK pizza takeaway segment increased 5.6 percentage points to 53.7%. 

For comparison, Just Eat’s UK orders declined 5% in the first half, while Domino’s remained flat.

Trading improved at the end of July, following a slow start attributed to tough comparisons against last year’s UEFA European Championship period. 

A trial of the company’s loyalty program is performing ahead of internal expectations, with a full launch expected in fiscal year 2026.

Domino’s said there are no second brand opportunities currently under consideration that would require equity issuance. Share buybacks may resume if no acquisition is announced by the end of the year.

The company is trading at 11.4 times its expected FY25 earnings, about 40% below its pre-pandemic average, according to Jefferies.