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Tue 6th Aug 2019 - Domino’s UK reports like-for-like sales up 3.9%, CEO David Wild to retire |
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Domino’s UK reports like-for-like sales up 3.9%, CEO David Wild to retire: Domino’s Pizza UK has reported system sales rose 4.7% to £645.8m in the 26 weeks ended 30 June, with like-for-like sales in the UK up 3.9%. Underlying profit before tax was down 7.4% to £42.3m. Chief executive David Wild has also announced he plans to retire – and a search for a successor is underway. UK and Ireland operating profit £51.6m, up 7.1%. Its international performance ‘remains challenging’ with system sales down 3.4%, up 0.4% on a constant currency basis. The international operating loss was £6.4m, versus £1.8m loss in H1 2018. The company stated: “Active discussions with our UK and Ireland franchisees continue; new store openings and some working practices being impacted whilst these are ongoing. We remain committed to finding sustainable, win-win solutions but anticipate that resolution will take time, likely into 2020.” 13 stores opened in H1, of which seven are in the UK, taking the group total to 1,272. Digital continues to drive customer engagement – online now accounts for 82% of UK system sales. Emily Somers is joining as chief marketing officer – she was previously vice president of marketing and food development at McDonald’s. Wild said: “Our core UK and Republic of Ireland markets delivered a good performance, with system sales up 5.5% and underlying operating profit up 7.1%. Digital remains a key driver of customer engagement, with online now accounting for 82% of total sales in the UK. Although a small part of our business, we are delivering pleasing operational improvements in our London corporate store estate. The relationship with our UK and Ireland franchisees is very important to the long-term sustainable growth of the system. We are actively involved in detailed discussions and are giving these considerable focus and attention. Whilst dialogue is continuing, new store openings are being delayed and some of our working practices are being impacted. The situation is complex, and we expect resolution will take some time, likely into 2020. We are committed to working with our franchisees to agree sustainable win-win solutions. The performance of our International business is very challenging and trading visibility remains limited. The weakest performance was in Norway, although we also saw increasing losses in Sweden and Switzerland. Iceland profitability was impacted by the weak macro-economic backdrop. We are very focused on improving our operational capability across our International markets and will provide a further update at our full year results.” Of its franchisees, it added: “In the UK we have 63 franchisees, with a further seven in Ireland. Our franchisees are amongst the best entrepreneurs and operators in the Domino’s system worldwide, and they have been an important component of the success of the group over several decades. The largest two franchisees account for 39% of stores, with the third largest accounting for a further 7%.We are actively involved in detailed discussions with our franchisees to agree a way forward sustainably to grow future system profits, in a way which benefits both the group and our franchisees. We are giving considerable focus and attention to these discussions. Whilst they progress, some working practices continue to be affected, with the timing of store openings being delayed and joint activities such as national marketing campaigns also being impacted. We are confident that we will ultimately agree long-term, sustainable, win-win solutions, however we need to allow sufficient time for these discussions to take place and for agreements to be reached. The situation is complex and we expect resolution to take some time, likely into 2020. Fundamentally our interests are aligned: we all benefit from increased scale, through the growing value of the brand, greater buying efficiency and the shared investment in new innovations to further improve the customer experience.”
Shake Shack reports like-for-like sales up 3.6% in Second Quarter: Shake Shack has reported like-for-like sales rose 3.6% in its Second Quarter to 26 June. Chief executive Randy Garutti said he’s “bullish on the tremendous growth opportunity” in Mainland China. The company announced a delivery partnership at 150 US sites with Grubhub. Operating income dropped in the quarter as Shake Shack faces higher food costs for items including beef and dairy. The chain is also seeing labour inflation across the country, especially in New York, along with an increase in paper costs tied to delivery orders. The shares rose as much as 7% in late trading. The stock has appreciated more than 60% this year, more than four times the gain for the S&P 500. Garutti stated: “More than halfway through 2019, we are pleased to report continued strong momentum into the second quarter across all areas of the business. System-wide sales increased 33.2%, total revenue grew by 31.3% and adjusted Ebitda increased 18.5%, driven by positive same-Shack sales of 3.6% with traffic growth of 1.3%. Our digital channels, including delivery, were a key contributor to these results, in conjunction with a benefit from the shift in Easter timing within the second quarter. To further strengthen our ongoing digital evolution, and as a part of our focus on accessibility and convenience for our guests, we’re pleased to announce an integrated delivery partnership with Grubhub, which will be rolled out across the system over the remainder of this year and into early next. Based on our second quarter results, we are raising our overall revenue guidance including our licensing revenue guidance. It has been a tremendous year so far for our international business, having entered Mainland China for the first time in January, the Philippines and Singapore in the second quarter, and most recently Mexico, earlier in the third quarter. To further our international growth in Asia, we are also pleased to announce our expansion into Beijing through our newly executed development agreement with Maxim’s Caterers. We’ve had an incredible start in Hong Kong over the past year, and combined with our first six months in Shanghai, we’re bullish on the tremendous growth opportunity we believe exists for the Shake Shack brand in Mainland China. Overall, we have strong and positive momentum across the business heading into the second half of the year and continue to execute well against a robust domestic and international development pipeline, while also testing new Shack formats, and increasing accessibility and convenience through ongoing digital innovation.”
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