Strong first half trading performance reflecting good progress on strategic objectives

All commentary below is on an underlying basis unless otherwise stated

Financial highlights

• Strong UK & Ireland performance, with system sales of £752.3m, up 19.6%, with like-for-like system sales, excluding splits, up 19.3% (18.4% including splits) aided by the reduced rate of VAT. Excluding the benefit of the reduced rate of VAT, underlying like-for-like system sales, excluding splits, grew by 5.5%
• Underlying profit before tax of £60.8m, up 27.7%, driven by the strength of the core business and lower Covid-19 related costs 
• Statutory profit after tax of £41.3m, up from £19.0m, benefitting from the successful disposal of all but one of the loss making international operations
• Strong free cash flow performance increasing by 9.3% to £51.3m (H1 20: £46.9m)
• Net Debt of £177.6m, (H1 20: £202.1m, FY 20: £171.8m) broadly in line with last year, 1.36x Net Debt/EBITDA on a continuing basis
• In line with our capital allocation philosophy and commitment to distribute surplus capital to shareholders we are announcing an additional £35m to the existing £45m share buyback programme and will pay an interim dividend of 3.0p per share on 24 September 2021 
• In FY 21 we have announced £136m of surplus capital to be returned to shareholders via dividends and share buybacks

Operational highlights

• Strong sales performance boosted by our new integrated media campaign, ‘Domin-Oh-Hoo-Hoo’, targeting families and friends reuniting post lockdown and by the Euros group stage. The England vs Scotland match was our highest recorded trading day this calendar year
• Total orders returned to a positive trend, up 3.5% in the first half, driven by collection orders up 27.1%, as we lap the closure of the collection business for much of Q2 last year. Collection orders traded at 71% of 2019 levels during the half, and are currently trading at over 75%   
• Impressive service standards with best in class average delivery time of less than 25 minutes.
• Digital momentum continues, with UK online sales up 25%, representing 93% of UK system sales
• Excellent progress on disposal of discontinued international operations with Swedish and Icelandic disposals completed, leaving only the Switzerland business, where the disposal process is ongoing
• Constructive engagement with our franchisees continues as we work together to reset our relationship to drive growth of the system – implemented new incentives to accelerate new store openings

Strategic update

• We have made excellent progress in the first half on our strategic initiatives to deliver our medium-term ambition of total system sales of £1.6bn to £1.9bn
• A new store incentive mechanism has been successfully deployed with 13 new franchised stores opened in the first half (H1 20: 8). The stores are trading ahead of expectations and provide confidence in our target to open up to 30 new stores in the year as we accelerate toward our medium-term ambition of 200 new stores
• We continue to invest in the supply chain to support growth with the opening in April of a new supply chain centre in Cambuslang, Scotland
• Investment in technology to drive sales has increased with our new online ordering App which features new Group Ordering functionality and Deal Wizard
• Implemented an omni-channel customer engagement platform ‘Braze’, enabling a step-change in personalisation and automation of our CRM activity
• Launched our In Car Collection service which is now available in over 300 stores

Current trading and outlook

The second half has started well with strong total order count growth as we benefitted from our supercharged marketing campaign, and the extended involvement of the English football team in the Euros. Our vertically integrated system has worked effectively to deliver great service to customers as we dealt with unprecedented peaks in demand.

As the second half develops we will operate within a shifting and uncertain landscape as the nation is released from the restrictions imposed by the Covid-19 pandemic, and the country returns to a level of normality. We believe this will benefit our Collection business, which we expect to gradually recover toward order count levels more in line with 2019. Our delivery business will face more competition as the hospitality trade reopens but we believe the strength of our brand and our continued investment in developing our offer will enable the delivery business to maintain its performance.

We have now passed the anniversary of the lower VAT rate which was introduced in July 2020.  As expected, as the scheduled VAT rate increases are implemented, our system sales growth will be lower in the second half. However, whilst changes in VAT impacts reported system sales growth it has limited flow-through to our profitability.

Our highly cash generative, flexible and robust business model is incredibly agile and can adapt quickly in changing market conditions. This has enabled us to increase our share buyback programme and provides us with confidence that we will continue to make progress in the remainder of this year.

Commenting on the results, Dominic Paul, Chief Executive Officer said:

“I am delighted with the performance of the business in the year to date. We’ve worked closely with our franchisees to maintain fantastic service levels to our customers, while continuing to prioritise the safety of our colleagues and customers. I’d like to thank everyone in the system for their incredible commitment through the pandemic.

We have continued to invest in the business as we focus on delivering our strategy with the opening of a new state of the art supply chain centre in Scotland, the launch of our redesigned mobile ordering App, and the roll out of our supercharged marketing campaign which has strengthened our brand and significantly boosted awareness levels.

The strong trading in the first half of the year provides us with the firm foundations for the delivery of our strategic growth objectives, which build upon our strengths in both delivery and collection. This will enable us to deliver strong system sales growth and increase our store numbers in the UK and Ireland.

Whilst the external landscape remains uncertain, the second half has started well. I believe our agile business model leaves us well placed to capitalise on the significant opportunities ahead while continuing to invest in our strategy, which will deliver benefits for franchisees and shareholders alike.”

Notes
¹ System sales represent the sum of all sales made by both franchised and corporate stores to consumers in UK & Ireland
² Like-for-like excluding splits system sales performance is calculated for UK & Ireland against a comparable 26 week period in the prior year for mature stores which were not in territories split in the year or comparable period. Mature stores are defined as those opened prior to 29th December 2019.
³ Underlying is defined as statutory performance excluding discontinued operations, and items classified as non-underlying which includes significant non-recurring items or items directly related to merger and acquisition activity and related instruments
⁴ Net Debt is defined as the bank revolving facilities, cash and cash equivalents and other loans, including balances held in disposal groups held for sale

Contacts

For Domino’s Pizza Group plc:
Investor Relations
Will MacLaren, Head of Investor Relations
Geoff Callow, Fiona O’Nolan – Equitory
+44 (0) 7443 192 118

Media:
Tim Danaher, Samantha Chiene – Brunswick
+44 (0) 207 404 5959

For photography, please visit the media centre at corporate.dominos.co.uk, contact the Domino’s Press Office on +44 (0)1908 580757, or call Brunswick on +44 (0)207 404 5959

Results webcast

A results webcast and Q&A for investors and analysts will be held at 9.30 am today. The webcast and presentation can be accessed via the registration link and will also be available on the Results, Reports and Presentations page of our corporate website.

Financial calendar

Domino’s Pizza Group plc will publish its Q3 trading update in October 2021.

Cautionary statement

Certain statements made in this announcement are forward‐looking statements. Such statements are based on current expectations and assumptions and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results expressed or implied in these forward‐looking statements. Persons receiving this announcement should not place undue reliance on forward‐looking statements. Unless otherwise required by applicable law, regulation or accounting standard, Domino’s does not undertake to update or revise any forward‐looking statements, whether as a result of new information, future developments or otherwise.

About Domino’s Pizza Group

Domino's Pizza Group plc is the UK’s leading pizza brand and a major player in the Irish market. We hold the master franchise agreement to own, operate and franchise Domino’s stores in the UK, the Republic of Ireland, Switzerland, and has associate investments in Germany and Luxembourg. As at 27 June 2021, we had 1,212 stores in the UK and Ireland.