Domino’s Pizza Group has this morning reported a 14% increase in system sales to £426.7m for the 26 weeks ended 28 June 2015, with like-for-like sales in the UK up 10.3% to £378.8m (against 11.3% in 2014).
UK system sales increased 15.2% to £397m in the half year. Like-for-like order volumes were ahead by 7.4% in the UK whilst average basket size grew by 2.9%, which the company said was helped by bundle deals aimed at value-for-money for the family.
The group, which saw underlying profit in the period climb 30% to £32.1m, opened 21 stores in the UK during the half year against eight in 2014 and said that system sales per store were almost 12% ahead.
It said that it had had an excellent start to the year, with like-for-like sales up more than 10% in the UK, but warned it faced “some very tough comparatives in the second half”.
The company, which operates 916 sites including 834 in the UK, highlighted the continued success of its digital investment programmes in the UK, with e-commerce system sales ahead by 24.4% and app based sales now representing its largest distribution channel driving 51.6% of online sales.
It invested an additional £1.4m in its e-commerce platforms compared to last year. In the UK they now represent 77% of all delivered sales, up from 69.7% in the prior period. It said that its UK business is now truly digital enabled.
It said: “Digital channels deliver a number of benefits for both the consumer and our Franchisees. From a consumer perspective, orders are more accurate and offers more easily accessed, ensuring that they get the best value. Franchisees benefit through store labour efficiencies and being better able to target local marketing campaigns, particularly through eCRM.
“The results of this strategy are clear, with online orders in the UK 21.8% ahead and average order value 2.1% ahead of the prior period. App based sales continues to drive much of our success, with orders 63.3% ahead and order value 2.5% ahead. Ten million consumers have now downloaded our Mobile App in the UK.”
The group said that it had experienced a significant increase in franchisee profitability over the half year, with EBITDA performance up from 12.9% to 15.1%.
It said that 10 of the 21 stores opened during the period were splits. It said that the success of ‘splitting’ is expected to drive further store openings in urban areas.
The company said: ”We expect to open at least 50 stores over the full year and have a very strong pipeline of identified sites for further openings.”
The four roadside sites it was trialling with at Extra schemes were closed during July. The format was initially launched as a trial in 2013 but it said it had not proved popular with customers. A full provision was made in 2014 for the costs associated with closing these stores.
It also reported improving performances across its international businesses, with economic recovery and operational improvements in the Republic of Ireland and losses narrowing in Germany from £4.7m to £1.8m.
During the period it opened new corporate stores in Switzerland.
It said that cash conversion remains a key strength of the business and it closed the period with net cash balances of £19.2m (29 June 2014: net debt of £3.7m).
Chief executive David Wild said: “We’ve had a strong first half, driven by an excellent performance in our core UK business, which has again recorded double digit like-for-like sales growth. Our international operations have also shown improvements compared to last year.
“Our success in the UK is a result of the investment we have made in market-leading e-commerce initiatives. Our App has now been downloaded over 10 million times and our App sales have overtaken desktop sales for the first time.
“The 21 new stores opened in the period are performing better than ever. Our roll out is well supported by our franchisees, who are benefiting from increased profitability and are seeing a good reaction from the UK consumer to our bundle deals and other initiatives.
“Whilst we are pleased with our performance in the first half, we face tougher comparators in the rest of the year. We have a continued programme of e-commerce initiatives and other marketing campaigns. The UK new store pipeline is solid and we are well-positioned for the future.”
