Positive trading momentum in Q2

London corporate stores disposal complete and new £20m share buyback

* Underlying excludes a profit of £40.6m in H1 23 from the disposal of the German associate and a £11.2m profit on disposal of corporate stores, Shorecal acquisition costs of £2.2m and amortisation of intangible assets of £1.0m in H1 24. For EPS, this also excludes the non-underlying tax charge of £4.5m.

Commenting on the results, Andrew Rennie, CEO said:

“Following a slow start to the year, we now have good momentum in the business with our strategic initiatives gaining traction and our trading performance accelerating steadily against strong comparatives from last year. In Q2 we grew orders, with a notable improvement from the middle of May and importantly have halted the trend of declining delivery orders. These are now returning to growth and this momentum has continued through June and July, helped by a good performance through the Men’s Euro Football tournament.”

“We’re executing well in an uncertain market thanks to our unrelenting focus on brilliant value, quality and service for our customers. Our average delivery time is now 24 minutes, which creates even better value for our customers. We have continued to support the growth of the system through passing on food cost deflation to our franchise partners.”

“In our core UK & Ireland business, we see significant opportunity for further growth through opening new stores, an exciting new loyalty trial to drive frequency and a focus on value and service, especially in the delivery channel. There is alignment with our franchise partners and tangible energy across the system to capitalise on this opportunity.”

“We continue to operate a capital light business and are moving towards our goal of building a larger and more profitable business for our shareholders, franchise partners and colleagues.”

Financial highlights

• Group revenue down 1.8% with lower supply chain revenue offset by increased corporate store revenue following the acquisition of Shorecal
• Underlying EBITDA up 0.4% at £69.0m. Excluding the £2.3m gain on sale of freehold property in H1 23, Underlying EBITDA is up 3.9%
• Underlying profit before tax up 0.8% to £51.3m, with higher interest costs offset by lower amortisation
• Statutory profit before tax of £59.4m after including £8.1m of non-underlying items
• Interim dividend of 3.5p per share, up 6.1%
• Net Debt⁴ of £285.4m and a leverage ratio of 2.16x, within our target Net Debt / EBITDA leverage range of 1.5x – 2.5x
• Issuance of new £100m 5.97% USPP notes due in 2034. Supports reduced utilisation of RCF, which has a higher interest rate, and extends the debt maturity profile
• New £20m buyback programme reflecting confidence in future prospects
• In line with strategy to recycle capital, disposal of London corporate store estate now complete. 30⁵ stores sold to five different franchise partners for a total consideration of £35.1m, of which £17.3m was received by 30 June 2024

Operational and strategic highlights

• H1 24 total orders of 35.1m, down 0.9% vs. H1 23, with collection orders up 2.4% and delivery orders down 2.6%. On a comparable basis⁶, total orders were down 0.1%
• Improved trading momentum in Q2 24, highlighting the growing traction of our strategic initiatives
  • On a comparable basis⁶ Q2 24 total orders up 0.6% and up 0.1% on a reported basis
  • On a comparable basis⁶ Q2 24 delivery orders up 1.1% after ten consecutive quarters of declining volumes. Delivery orders flat on a reported basis in Q2 24
• Sustainable growth in H1 24 franchisee EBITDA per store, £81k, +6.6% vs. H1 23, despite impact of large minimum wage increase
• 22 new store openings vs. 29 in H1 23. Acceleration in H2 24 openings with 4 so far vs. 1 in the same period last year, pipeline remains strong, with 38 stores in construction or planning approved. In a slower planning environment, we are still expecting to exceed FY23 store openings with a target of 70 new stores in FY24
• Outstanding service improvements with Q2 24 average delivery times of 24 minutes, a one-minute improvement on Q1 24, as a result of intense operational focus from our franchise partners
• Continued digital progress with growth in app customers and orders
  • 9.5m active app customers, up 17% vs H1 23 with app orders as a percentage of online orders at 77.6% (+2.4ppts vs.Q2 23)
  • Following encouraging results in first loyalty test phase, now moving to second phase of loyalty trial with c.630k customers
• Decision taken to permanently roll out on the Uber Eats platform following extensive data-led trial which attracted incremental customers and orders

Current trading, outlook and guidance

The growing traction of our strategic initiatives drove improved trading momentum from the middle of May, through June and July. Q2 orders were back in growth and also benefitted from the return to growth in delivery orders following ten consecutive quarters of decline. Total orders in July were up 5.8%⁶ on a comparable basis, with a good contribution from the Euros.

In March 2024 we guided that FY24 Underlying EBITDA would be in line with market expectations, and that we did not expect Shorecal to make a significant contribution to FY24’s performance. As announced, the Shorecal acquisition completed sooner than originally anticipated and investment costs are lower than planned. Consequently, we now expect Shorecal to contribute c.£5m to FY24 Underlying EBITDA.

Whilst we anticipated some food cost deflation in FY24, we are now planning to pass on a greater level in H2 to our franchise partners as we continue to deliver value offers for customers, underpin the strength of the system and drive long-term growth. We expect our recent momentum to continue. However, given the slower start to H1 and the greater pass-through of food costs to franchise partners, we now expect FY24 Underlying EBITDA, including the contribution from Shorecal, to be towards the lower end of the current range of market expectations⁷.

Despite the uncertain market, we are confident we will maintain our trading momentum into H2 24 as we continue to execute on our strategic initiatives and expect to deliver growth in both order count and like-for-like sales in FY24.

Our technical guidance for FY24 is as follows:

• No benefit to underlying profit from the sale of property (£2.3m benefit in H1 23)
• Shorecal expected to contribute c.£5m to Underlying EBITDA
• Underlying depreciation & amortisation of between £18m to £20m
• Underlying interest costs (excluding foreign exchange movements) in the range of £17m to £20m
• Estimated underlying effective tax rate of c.24.5% for the full year
• Capital investment of c.£20m
• Net Debt at year-end between £250m and £270m

Contacts
For Domino’s Pizza Group plc:
Investor Relations
Will MacLaren, Head of Investor Relations +44 (0) 7443 192 118

Media:
Tim Danaher, Abbie Sampson – Brunswick +44 (0) 207 404 5959

Results meeting

A results meeting and Q&A for investors and analysts will be held at 09:30 BST today. The webcast and presentation can be accessed by here and will also be available on the Results, Reports and Presentations page of our corporate website.

In addition, we will replay the webcast and Q&A at 16:00 BST today for North American based investors not able to join the live presentation at 09:30 BST this morning. Please click here to register.

About Domino’s Pizza Group (“DPG”)

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 and the Republic of Ireland. As of 5 August 2024, we had 1,344 stores in the UK and Ireland.

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.

Notes

¹ H1 24 is 26 weeks ended 30 June 2024. H1 23 is 26 weeks ended 25 June 2023.
² System sales represent the sum of all sales made by both franchised and corporate stores to consumers in UK & Ireland. These are excluding VAT.
³ Underlying is defined as statutory performance excluding discontinued operations, and items classified as non-underlying which includes significant irregular costs, significant impairments of assets, together with fair value movements and other costs associated with acquisitions and disposals as set out in note 4 to the financial information. Underlying excludes a profit of £40.6m in H1 23 from the disposal of the German associate and a £11.2m profit on disposal of corporate stores, Shorecal acquisition costs of £2.2m and amortisation of intangible assets of £1.0m in H1 24. For EPS, this also excludes the non-underlying tax charge of £4.5m.
⁴ Net Debt is defined as the bank revolving facilities, private placement facilities, cash and cash equivalents and other loans, including balances held in disposal groups held for sale.
⁵ 30 London corporate stores sold to five different franchise partners. One London corporate store was closed due to a compulsory purchase order issued by the local council.
⁶ FY23 was a 53-week year, so the comparator weeks between H1 23 and H1 24 are different. H1 23 included Boxing Day and New Year’s Eve, whereas these two important trading days did not fall into H1 24. The comparable basis adjusts for this difference, by comparing week 1-13 in Q1 24 with weeks 2-14 in Q1 23, and weeks 14-26 in Q2 24 with weeks 15-27 in Q2 23.
⁷ Current mean of FY24 Underlying EBITDA expectations: range of £144.3m - £149.2m, with a mean of £147.1m. Based on 8 analysts’ forecasts.