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Investing.com -- Domino’s Pizza Group PLC on Tuesday posted its latest financial results, reflecting a solid year-end performance, though revenue came in slightly below expectations.
The pizza restaurant chain reported revenue of £664.5 million, short of the £683.3 million forecast.
However, underlying EBITDA stood at £143.4 million, in line with estimates, while underlying profit before tax reached £107.3 million, surpassing the £105.3 million projection. Net debt was reported at £266 million, representing 1.9 times EBITDA.
Sales performance was steady, with like-for-like system sales, excluding franchisee splits, up 3% in the fourth quarter. For the full year, sales growth was a modest 0.7%, a figure mirrored in the first ten weeks of the 2025 financial year.
Expansion efforts continued, with 54 new store openings, exceeding the projected 50, and the company aims to maintain this pace with at least 50 new locations in 2025, though consensus expectations were at 58 and Jefferies projected 70.
The company’s new loyalty program completed a successful trial, engaging 630,000 customers and exceeding expectations.
As a result, it is being expanded to 3 million customers ahead of a full-scale launch in the 2026 financial year. Analysts see this as a strategic initiative to enhance customer engagement and boost sales through data-driven insights.
Domino’s also made further investments in its Northern Ireland operations, acquiring an additional 24% stake in its joint venture for £25.6 million, bringing its total ownership to 70%. This acquisition is expected to contribute approximately £3 million to underlying EBITDA.
The purchase was structured with £7.2 million in equity and £18.4 million in debt. The company has indicated that any potential deals could be accommodated within its existing balance sheet capacity, reassuring investors about financial prudence.
Domino’s expects its underlying EBITDA, excluding the Northern Ireland acquisition, to align with current estimates of around £146.4 million, within a range of £143 million to £148.2 million.
Jefferies, however, estimates EBITDA for FY25E at £152 million. RBC Capital Markets has maintained an “outperform” rating on the stock, with a price target of 365 pence, reflecting confidence in the company’s ability to sustain growth.
A leadership change is also on the horizon, with current chairman Matt Shattock stepping down. Senior Independent (LON:IOG) Director Ian Bull is set to take over the role following the annual general meeting in April.
Uncertainty remains a key theme, but there are signs of progress in expansion, a rising dividend, and trade momentum.
However, inflation and consumer confidence remain significant hurdles. Domino’s must continue appealing to value-conscious consumers in a tough economic environment.
The company is also facing increased employment costs, with minimum wages rising by 10% in April 2024, which could impact store profitability and future openings.
“The Domino’s discount doesn’t just come through the letterbox. UK shares are now much cheaper than DOM’s US sibling, as one of the most shorted stocks on the UK market. To get back into the market’s good books, profits really need to start motoring under the new five-year framework. If they don’t, investors are likely to pile even more pressure on the pizza brand,” said Robinhood (NASDAQ:HOOD) UK’s lead analyst Dan Lane in a note.