Domino's forced to bail out struggling franchisees
Domino's Pizza has been forced to give financial support to its Irish franchisees because of the difficult economic conditions here, the company revealed yesterday.
Releasing full-year results for 2010, Domino's Pizza UK and Ireland, the company that controls the pizza brand in the two jurisdictions, said that in 2010 it provided €597,000 in assistance to its franchisees here "as a result of the impact and the difficulties being experienced" by them and the impact on their sales.
It provided no such support in 2009.
There are 617 Domino's stores in the UK and 48 in Ireland. Shares in the company closed down almost 4pc yesterday, paring a bigger loss earlier in the day as it reported slacker like-for-like sales growth since the beginning of January after months of stellar performances that had seen the stock rise as much as 80pc in a year.
Despite reporting a 19.3pc rise in overall sales to €579.5m for 2010 and a 27.3pc jump in pre-tax profits to €45.3m, investors shed the stock as Domino's said that in the first seven weeks of 2011 like-for-like sales rose by a relatively sluggish 4.7pc.
Chief executive Chris Moore said the figure came against the backdrop of "exceptional" comparatives from the same period in 2010 and a difficult economic climate. It sold one million pizzas a week on average in 2010.
The company had received a boost in sales in January last year as cold weather prompted more people to order in. It also benefited last summer from the World Cup.
The firm said the launch of its new iPhone app had been successful and generated over €1.2m of sales in the first three months of operation in Ireland and the UK.
Online sales in general continued to grow for Domino's, with online orders increasing 63pc year-on-year in 2010 to €152.8m.
Domino's also confirmed it had axed its sponsorship of ITV's hit television show 'Britain's Got Talent' after negotiations with the station failed to reach agreement. Moneysupermarket was named as the new sponsor last month.
Domino's finance director Lee Ginsberg said ITV had been looking for an "outrageous" amount of money to continue sponsorship of the show that spawned the singer Susan Boyle.
Unadjusted net profit at Domino's fell 14.1pc to €42m last year as a one-off gain in 2009 wasn't repeated.