Dominos pizza

Domino's Pizza (ASX: DMP) shares have plunged after the chain missed its full-year earnings guidance and indicated slowing sales in Australia in the new financial year.

Excluding one-off charges totalling $14.5 million relating to its European and Australian operations, full-year underlying profit rose 15 per cent to $136.2 million, missing the group's profit growth guidance of 20 per cent.

Domino's statutory net profit jumped 18 per cent to $121.5 million for the year ended July 1, thanks to strong demand for its pizzas and new store openings, and forecast comparable store sales to be three to six per cent higher in 2018/19. Revenue was up 7.5 per cent to $1.15 billion.

Chief executive Don Meij says the the company has delivered positive growth in all its markets as the group pushed ahead with bolstering its store network.

"The results of this year reinforce our confidence in our business," , Meij said on Tuesday. "Strong store metrics with increasing profitability mean internal franchisees are opening new stores and building their businesses," he said.

Domino's added almost six stores a week in 2017/18, building 145 new stores and acquiring 163 stores from other brands. The group plans to add between 225 and 250 stores in 2018/19.

Domino's shares fell sharply in opening trade, however, and were down $5.20, or 10 per cent, to $47.22 at 1048 AEST in a higher Australian share market.

In outlook the group indicated same store sales for Australia and New Zealand were slower for the first five weeks of the new year at 3.9 per cent, compared to 4.5 per cent for 2017/19.

Europe same-store sales were also slower in the new year, while Japan had sharply lifted business to show same-store sales growth of 12 per cent.

In Australia and New Zealand for 2017/18, the group's annual network sales rose 7.7 per cent to $1.12 billion, driven in part by 50 new stores.

Its European operations delivered a 16.9 per cent jump in network sales to EUR642.1 million ($A1.0 billion), thanks to the opening of 68 new stores and 163 recently acquired Hallo Pizza stores.

The pizza chain will pay a final dividend of 49.7 cents a share, partially franked, up from 44.9 cents a year earlier.

The numbers

  • Net profit up 18pct to $121.5 million
  • Revenue up 7.5pct to $1.15 billion
  • Final dividend 49.7 cents, partially franked, up 4.8 cents from 44.9 cents
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