Domino’s UK has reported like-for-like sales up 2.2% in the UK in the 13 weeks to 30 September.
The group grew UK system sales 6.1% during the period and with like-for-like order volume growth of 1.4% and ticket growth of 3.6%, driven mainly by a 3.1% increase in items per basket. A further 20 stores were opened in the UK in Q3. The company still expects around 60 openings for the full year.
Online sales in the UK were up 11.4% and represented 78.3% of total sales during the period. GPS is now live in 603 UK stores.
The group completed a £50m share purchase programme with a further £25m to commence immediately, taking year end net debt into our 1.75 - 2.5x net debt/EBITDA target range.
Chief executive David Wild said: “Our businesses continue to trade well, despite the evident uncertainty among UK consumers, and hot weather across Europe for much of the quarter. I’d like to thank our franchisees for their ongoing commitment to the development of the Domino’s brand, with the opening of a further 20 stores in the UK this quarter; we are confident of reaching 60 stores for the year.
“In our international operations, we are making good progress on refining the operating model and cost base, and we expect Group Underlying Profit Before Tax for the 2018 year to be in the middle of the range of market expectations. In addition, given the strength of our balance sheet and the highly cash generative nature of the business, the Board has approved a further £25m of share buybacks, to commence immediately.”
Peel Hunt analysts Douglas Jack and Ivor Jones said: “UK LFL sales rose by 2.2% in Q3 vs an 8.1% comp, leaving YTD LFL sales at 4.6%, ahead of our 3.0% FY assumption, despite this year’s advertising campaign commencing in November vs September last year. We are holding our 2018E forecasts and nudging up earnings to reflect an extra £25m of share buy backs this year, which is justifiable, in our view, given the record cash inflow and 10-year record low P/E valuation.”
