The Domino’s Pizza Enterprises Ltd. (ASX: DMP) share price has fallen in reaction to its FY19 report.
Domino’s Pizza Enterprises is the largest pizza chain in Australia in terms of both network store numbers and network sales. It is also the largest franchisee for the Domino’s Pizza brand in the world. The company holds the exclusive master franchise rights for the Domino’s brand and network in Australia, New Zealand, Belgium, France, The Netherlands, Japan, Germany and Luxembourg with more than 2,400 stores.
Did Domino’s FY19 Result Sizzle?
Domino’s network sales increased by 11.9% to nearly $2.9 billion. Online sales grew by 18.2% to $1.94 billion. Same store sales growth came in at 3.6%. The network store count grew by 7.5%, or 179 stores, to 2,522 stores.
Management said there was a strong response in Japan to new initiatives with a 13.6% increase of sales and a 32.1% increase of EBITDA. Europe network sales rose by 11% and Australia & New Zealand sales increased by 4.6%.
Total underlying EBITDA (click here to learn what EBITDA means) increased by 8.9% to $282.4 million and underlying EBIT rose by 7.2% to $220.8 million.
Underlying net profit after tax (NPAT) went up by 6.1% to $141.2 million. But statutory profit fell by 4.6% to $115.9 million. The market consensus was expecting net profit to be $144 million, so Domino’s didn’t reach these expectations.
Pleasingly, Domino’s free cash flow rocketed 132.4% higher to $84.9 million with net capital expenditure growing by 40.1% to $90.8 million.
Domino’s Management Comments
Domino’s CEO and Managing Director Don Meij said: “We believe there is significant future potential in our existing Domino’s businesses – our combined markets have a population greater than the USA and a GDP greater than China, and we intend to build out this opportunity
“Where necessary, we have made strategic, short-term decisions this year to provide additional, targeted support to franchisees where local trading conditions require.”
Domino’s Dividend
Domino’s Board declared FY19 dividends amounting to 115.5 cents per share, which was an increase of 7.1%.
Is The Domino’s Share Price A Buy?
In the first few weeks of FY20 group same store sales growth has been 4.7%, following on from the 4.4% same store sale growth in FY19. Domino’s has opened nine new stores since the start of the new financial year.
Domino’s is no longer providing 12-month guidance, but over the next three to five years it is predicting annual same store sales growth of 3% to 6% and store count growth of 7% to 9%.
The Domino’s share price has fallen around 5% in reaction so far. I can see why with profit margins somewhat falling. But, food is an increasingly competitive industry with Uber Eats and others growing rapidly. That’s why I’d rather think about the exciting growth shares in the free report below instead.
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