Domino’s (ASX:DMP) Share Price in Focus Following Challenging FY24 Result

Domino's Pizza Enterprises Ltd (ASX:DMP) has reported its financial results for the fiscal year 2024, highlighting both successes and challenges faced by the company over the past 12 months. 

FY24 Financial Highlights 

- Network Sales: The company saw an increase in network sales of 4.6%, reaching $4.19 billion. 

- Same Store Sales Growth: Growth in same store sales was 1.5%. 

- Store Network: The number of network stores grew by 0.3%, totaling 3,795. 

- EBITDA: Earnings before interest, tax, depreciation, and amortization grew by 4.5% to $362.7 million. 

- EBIT: Earnings before interest and tax increased by 3% to $207.7 million. 

- Net Profit After Tax (NPAT): The NPAT declined by 1.9% to $120.4 million. 

- Dividend: The annual dividend per share fell by 3.7% to $1.059. 

Despite these figures, Domino's has reported that average franchised store profitability improved by 67% to $97,400 in FY24, driven by increased same store sales and reduced operating costs. However, this is still lower compared to the FY22 profitability of $113,500. 

Regional Performance 

- ANZ (Australia and New Zealand): Same store sales grew by 7.9%, with EBIT rising by 10.4% to $124.1 million. 

- Europe: Same store sales increased by 0.3%, and EBIT rose significantly by 33.8% to $70.7 million. 

- Asia: The region saw a decline in same store sales by 7.2%, with EBIT falling by 28.7% to $42.9 million. 

Domino’s cited that the launch of new products in ANZ and Germany contributed to improved performance. The company also implemented a restructuring program that delivered $50.2 million in savings, with over a third of these savings reinvested into the network to reduce costs and enhance marketing efforts. Additionally, Domino’s reduced its net debt by $148.6 million to $690.1 million, improving the business's leverage. 

FY25 Trading Update and Outlook 

Looking ahead, Domino’s notes that FY25 sales are slightly below expectations, largely due to timing issues related to promotional campaigns and one-off events. ANZ continues to show positive performance, while European sales are impacted by challenges in Germany. The Benelux countries (Belgium, the Netherlands, and Luxembourg) have experienced positive same store sales, but France requires further improvement, including increased marketing efforts. 

In Asia, Japan has faced negative sales, although there has been an increase in profitable orders with fewer discounts. Malaysian sales continue to be affected by geopolitical issues, while Singapore and Taiwan have seen positive same store sales. 

The company plans to maintain a flat to slightly positive store opening rate in FY25, with some targeted closures to enhance profitability in France and Japan. The long-term target of 7,100 stores, approximately 1.9 times the current network, remains in place, with significant potential seen in large markets such as Germany. However, store growth targets of 7% to 9% will not be achieved in FY25 or FY26. 

Domino’s share price has faced significant declines in recent years. While the current valuation may appear attractive to some investors, it remains to be seen if profitability will recover sufficiently to impact the share price positively in the near future. 

Domino's Pizza Enterprises Ltd (ASX:DMP) has reported its financial results for the fiscal year 2024, highlighting both successes and challenges faced by the company over the past 12 months. 

FY24 Financial Highlights 

- Network Sales: The company saw an increase in network sales of 4.6%, reaching $4.19 billion. 

- Same Store Sales Growth: Growth in same store sales was 1.5%. 

- Store Network: The number of network stores grew by 0.3%, totaling 3,795. 

- EBITDA: Earnings before interest, tax, depreciation, and amortization grew by 4.5% to $362.7 million. 

- EBIT: Earnings before interest and tax increased by 3% to $207.7 million. 

- Net Profit After Tax (NPAT): The NPAT declined by 1.9% to $120.4 million. 

- Dividend: The annual dividend per share fell by 3.7% to $1.059. 

Despite these figures, Domino's has reported that average franchised store profitability improved by 67% to $97,400 in FY24, driven by increased same store sales and reduced operating costs. However, this is still lower compared to the FY22 profitability of $113,500. 

Regional Performance 

- ANZ (Australia and New Zealand): Same store sales grew by 7.9%, with EBIT rising by 10.4% to $124.1 million. 

- Europe: Same store sales increased by 0.3%, and EBIT rose significantly by 33.8% to $70.7 million. 

- Asia: The region saw a decline in same store sales by 7.2%, with EBIT falling by 28.7% to $42.9 million. 

Domino’s cited that the launch of new products in ANZ and Germany contributed to improved performance. The company also implemented a restructuring program that delivered $50.2 million in savings, with over a third of these savings reinvested into the network to reduce costs and enhance marketing efforts. Additionally, Domino’s reduced its net debt by $148.6 million to $690.1 million, improving the business's leverage. 

FY25 Trading Update and Outlook 

Looking ahead, Domino’s notes that FY25 sales are slightly below expectations, largely due to timing issues related to promotional campaigns and one-off events. ANZ continues to show positive performance, while European sales are impacted by challenges in Germany. The Benelux countries (Belgium, the Netherlands, and Luxembourg) have experienced positive same store sales, but France requires further improvement, including increased marketing efforts. 

In Asia, Japan has faced negative sales, although there has been an increase in profitable orders with fewer discounts. Malaysian sales continue to be affected by geopolitical issues, while Singapore and Taiwan have seen positive same store sales. 

The company plans to maintain a flat to slightly positive store opening rate in FY25, with some targeted closures to enhance profitability in France and Japan. The long-term target of 7,100 stores, approximately 1.9 times the current network, remains in place, with significant potential seen in large markets such as Germany. However, store growth targets of 7% to 9% will not be achieved in FY25 or FY26. 

Domino’s share price has faced significant declines in recent years. While the current valuation may appear attractive to some investors, it remains to be seen if profitability will recover sufficiently to impact the share price positively in the near future.