Domino’s Pizza Group reports ‘strong’ first quarter but sees impact of VAT rise, orders grow 5.5%: Domino’s Pizza Group has reported “strong” trading in the first quarter with like-for-like system sales, excluding the impact of the increase in VAT and excluding splits, growing 3.9%. Orders grew 5.5% in the quarter despite a strong comparative “reflecting the stimulus to our delivery business last year from lockdown restrictions”, the company said. Order count growth in the quarter was driven by the recovery of collections, which grew 45.4%. The company said it continues to expect FY22 underlying Ebitda and earnings per share to be in line with current market expectations. The group stated: “Trading in the first quarter was strong, aided by our first national price campaign for several years, made possible because of the resolution with our franchisees. Collections, which is our most efficient channel from a labour perspective, have continued their recovery and grew 45.4% in the quarter, and across the quarter were at 95% of 2019 levels. As expected, given the lockdown comparator, delivery orders were 4.5% lower than the prior year. Pleasingly active customer growth continued its momentum and increased 4.0% compared with the same period last year. For the first quarter of FY22 the VAT rate on hot takeaway food was 12.5% compared with 5% in the first quarter of FY21. If the sales price to the consumer were to have been unchanged then the VAT rate increase would effectively deliver a reduced system sales value compared with the same quarter last year, which flows through to like-for-like system sales performance. Consequently, as a result of the higher rate of VAT in the quarter, UK & Ireland system sales were £365.9m, down 1.5% on the first quarter of last year. Excluding the impact of the increase in the VAT rate, system sales increased 4.9% in the quarter. Like-for-like system sales, excluding splits, were down 2.4%, again reflecting the higher rate of VAT in the quarter. As at 4 May 2022 we have opened nine new stores this year, by seven different franchisees, and remain on track to open at least 45 new stores this year, which would represent a circa 4% increase in our stores versus our 2021 year-end store count of 1,227. In-line with our capital allocation framework, which is to use the free cash generated by the business to optimise shareholder returns, we have completed £24.2m of the £46m share buyback announced at the full year results in March.” Chief executive Dominic Paul said: “We have momentum in the business with growth in order count and customer numbers, and are continuing to work closely with our franchisees following our resolution late last year. Our first national price campaign in a number of years has been a great example of what we can achieve when we work together. Our ambition is to consolidate our position as the nation’s favourite pizza brand and believe the time is now right to see whether we can reach an even broader customer base. On this basis, we have also commenced a trial that will enable customers in a small number of locations across the UK and Ireland to order Domino’s via the Just Eat platform but delivered by Domino’s drivers, making the most of our unrivalled network of best-in-class delivery drivers. It’s no secret that inflation is a key challenge for everyone at the moment and the current consumer environment is challenging, but our scale and integrated supply chain, as demonstrated in the covid downturn, mean Domino’s is well-placed to navigate the current conditions. What’s more, at a time when family budgets are under pressure, Domino’s remains an affordable treat everyone can enjoy, and we’re redoubling our focus on offering our customers the best possible value this year. We remain focused on accelerating the sustainable growth of the system, and working together with our franchisees to deliver a better future through food people love.”