Small cap results: Domino’s Pizza

Domino’s Pizza Enterprises has posted a 75.5% rise in net profit to $6.1 million for the six months to 31 December1 and has confirmed its full year guidance.

Franchise network sales grew 14.3% to $287 million, compared to the first half of 2007. Same store sales for the half year grew 7.6% over the first half of 2007.

Domino’s added 27 stores bringing the total number of stores in the network to 690. This included 21 stores in Europe and six in Australia and New Zealand.

Domino’s CEO Don Meij said the result reflected strong progress in European markets. “We are now the number one pizza delivery brand in France and The Netherlands.”

Same store sales in Europe increased by 15.03% while Australia and New Zealand increased by 4.77% above the first half last year.

“Sales and profits in the European market are also tracking ahead of schedule, with an operating profit up 200% on the corresponding period,” Meij said.

“Online ordering has been a hit, with The Netherlands now averaging 18% of all orders placed online. Australia now has online ordering in 97% of stores and New Zealand has online ordering in 87% of stores.”

The company plans to keep expanding its network with 43 store openings planned before 30 June. “Our current target is to develop a network of at least 733 stores by the end of the financial year.”

It is expecting the franchise segment to be the strongest growth segment of the Australia/New Zealand business, but corporate store sell down was affecting new store growth in the short term.

“We are expecting store growth to lift again in the first half of 2008/09, with significant opportunity to grow in Sydney, South Australia, Victoria and New Zealand,” Meij said.

Domino’s is watching commodity prices, he says. “Commodity prices are still rolling through and it’s too early to indicate if all management’s initiatives have negated the cost increases.”

The company will pay shareholders an interim fully-franked dividend of 4.1 cents per share. Shares in Domino’s opened this morning at $3.10, below it’s 52-week high of $3.49 in December 2007.