Domino’s Pizza, the popular pizza chain, has reported a decline in profits for the first half of the 2024 financial year. However, despite this setback, the company experienced significant growth in online sales, which has boosted its presence in the global market. In response to the news, the company’s share price rose nearly 4 percent on the Australian Stock Exchange.
According to an investor presentation, Domino’s recorded a net profit after tax (NPAT) of $62.3 million in the first half of 2024, a 13 percent decrease compared to the same period in the previous year. However, it is important to note that this profit was still 22.3 percent higher than the second half of 2023. Total network sales grew by 8.8 percent to $2.1 billion, with online sales surging by 11.8 percent to $1.7 billion.
Despite the decline in profits, Domino’s management remains optimistic about the future. The company reported that it has started to rebuild sales, earnings, and franchise profit across its local and international operations. The CEO and managing director, Don Meij, emphasized that Domino’s sales initiatives in Australia and New Zealand were gaining traction internationally. However, he acknowledged that more work is needed to achieve the same results in all 12 of the company’s markets.
One of the key drivers of Domino’s success has been its focus on online sales. The company’s significant growth in this area demonstrates the changing behavior of consumers who prefer the convenience of ordering food online. Domino’s has been able to capitalize on this trend by offering a seamless online ordering experience and expanding its delivery services.
In addition to its online sales growth, Domino’s has also taken steps to improve its performance in specific markets. In Australia and New Zealand, for example, more than half of its stores have extended their trading hours to meet lunchtime and late-night order demands. The company has also launched a $5 or less range in these markets to attract price-conscious customers.
While Domino’s has seen success in some international markets, such as Japan and Singapore, it has faced challenges in others. The company is placing a major focus on France, where delivery orders are growing, but carry-out orders have declined. Despite the difficult trading conditions in Asia, Domino’s has seen improvement in Japan and is working to grow its customer counts and franchise partner profits across all markets.
Looking ahead, Domino’s has a clear strategy in place to rebuild its customer base and increase franchise partner profits. The company is implementing a company restructuring plan that is expected to deliver $50 million in savings. One-third of these savings will be provided to franchise partners, demonstrating Domino’s commitment to supporting its network of stores.
In conclusion, while Domino’s Pizza may have experienced a decline in profits, its strong growth in online sales and expansion into global markets are promising signs for the company’s future. With a clear strategy in place to rebuild its customer base and increase franchise partner profits, Domino’s is well-positioned to continue its success in the competitive pizza industry.
