Domino’s upgrades profit forecast as X Factor drives pizza sales
The X Factor final on December 2 acted as the “catalyst” for its biggest day of sales for the year.
Domino’s Pizza expects to serve up higher-than-expected profits after the X Factor helped it post tasty fourth-quarter sales.
The food chain reported an 18.2% rise in sales across the group to £321.8 million in the 13 weeks to December 24, while in the UK revenue increased 10.1% to £294.7 million.
UK like-for-like sales were up 6.1% in the period, with Domino’s adding that the start of the X Factor final on December 2 acted as the “catalyst” for its biggest day of sales for the year.
A record 95 new store openings in the UK in 2017 also drove sales, Domino’s said, while it also booked full-year revenue growth of 8.7% in Britain and Ireland.
Boss David Wild said that as a result, full-year underlying pre-tax profit is expected to be “slightly above” the current range of market expectations.
Shares were up over 3% to 361p in morning trading as investors chomped on the news.
Mr Wild also said that the group, which trades from 1,045 stores, will open another 80 this year, creating 3,000 new jobs.
“We are pleased to report a good performance in quarter four, completing another year of significant progress and growth for Domino’s.
“With a record year for new store openings and continued like-for-like sales increases, the UK business has demonstrated its resilience in a challenging economic and competitive environment.”
The results come following a difficult period for Domino’s, which saw sales cool last year amid Brexit fears and as the weak pound squeezes household finances.
“Last year we were up against tough comparatives, but we traded harder, had more aggressive pricing and launched a new ad campaign, all of which helped,” Mr Wild added.
The chief executive also added his voice to a long list of business leaders calling for clarity over the Government’s Brexit position as Theresa May comes under renewed pressure from within the Tory party.
“There is confusion about what is going to happen. Consumers are being squeezed by lower real incomes and what businesses look for is a degree of certainty and a swift resolution,” he said.
Neil Wilson, senior market analyst at ETX Capital, believes that Domino’s is benefitting from shifting trends in eating habits, “eating in not out, ordering online and sitting down in front of the TV”.
He added: “Domino’s Pizza beat forecasts in the final quarter as more people stayed in on Saturday nights in front of the box. Changing consumer habits which have powered Just Eat to the FTSE 100 are supportive of Domino’s, although it didn’t always look this way.
“Like-for-like sales growth is now back in the double digits and the outlook is much healthier with volume growth more than offsetting a squeeze on margins.”