Domino’s FY lfl sales up 5.7%, upgrades growth targets: Domino’s has upgraded its growth targets for the UK and Ireland, targeting to have in excess of 2,000 stores by 2033, as the overall reported a 5.7% increase in like-for-like system sales in the year to 31 December 2023. The business, which currently operates circa 1,300 sites in the UK and Ireland said it now expects to have in excess of 1,600 stores in the UK and Ireland by the end of 2028 with the potential for this to be in excess of 2,000 stores in 2033. It said: “As a result of our store growth and continued focus on our core capabilities of giving our customers compelling value, great service, and an enhanced digital experience, we are now able to upgrade our £1.6bn-£1.9bn system sales target put in place in March 2021. We now expect to deliver £2bn system sales in the UK and Ireland by the end of 2028, and we see potential for this to be in excess of £2.5bn system sales in the UK and Ireland in 2033.” The company said that Total system sales were £1,541m, up 5.8% on FY22 on a 52-week basis. Like-for-like system sales across UK and Ireland increased by 4.1%, excluding split stores, or by 2.9% including splits. Like-for-like system sales, excluding splits and the different VAT rate in Q1 22, increased by 5.7%. However, it said that like-for-like system sales in Q4 23 were only ahead 0.4% against a tough comparator (Q4 22: +13.9%). It reported that group revenue for the year was up 11.1% to £679.8m (53-week basis: +13.2%), driven by an increase in system sales volume, acceleration of store openings and the pass-through of increased food cost. Underlying Ebitda was 3.6% to £138.1m (53-week basis: +6.1%), which includes £8.9m of previously guided technology platform costs and no contribution from Germany (FY22: £2.6m). Statutory profit after tax stood at £115m, +40.9%, driven by proceeds from the disposal of the German associate, generating a profit of £40.6m recorded in non-underlying results. The business aid that during the year it continued to gain UK takeaway market share, with a 7.2% market share in FY23, up from 7.1% in FY22. It saw total orders of 70.5 million on a 52-week basis, up 1% versus FY22, while collections grew to 25.3 million orders, up 13.3% versus FY22. It opened 61 new stores and expects to open in excess of 70 new stores in FY24. Average franchisee store Ebitda was up 9% versus 2019. At the same time, the business announced the acquisition of the remaining 85% shareholding it does not already own in Shorecal Limited, the largest Domino’s franchise business operating in the Republic of Ireland and Northern Ireland, which it does not own, for circa £62m. Shorecal operates 34 of the 99 Domino’s stores across the Republic of Ireland and Northern Ireland. The company said that the acquisition will allow the business to take control of a significant opportunity to “materially increase the store count in the Republic of Ireland and Northern Ireland”. The company said: “We have maintained strong momentum against our key strategic priorities in the first quarter of FY24 with a rapid deployment of the Uber Eats trial and 7 new stores opened, with a further 33 with planning consent or under construction. New store openings will accelerate and we now expect to open in excess of 70 stores in FY24. We expect to see some food cost deflation in FY24 which, in line with our model, will be passed through to our franchise partners. In FY23 we proactively took action to reduce our cost base and this will partially offset the overall impact of inflation on our cost base in FY24. As a result, we expect to deliver FY24 underlying Ebitda in line with current market expectations8, and so delivering another year of further profit growth, despite the continued uncertain consumer environment. Trading in February 2024 has seen an improved sales and order trajectory following a slow January, in part because we tactically held back on marketing spend to support more strategic launches later in 2024. We expect the current trajectory to continue but, due to performance in January, we expect orders and like-for-like sales growth to be lower than in Q1 23. We are committed to offering our customers compelling value and a new £4 lunch offer will be launching shortly, providing an incremental opportunity to target different parts of the day. We are confident that our focus on our strategic priorities will deliver order count and like-for-like sales growth in FY24.” Andrew Rennie, chief executive, said: “Last year we continued to make strong strategic progress with 61 new store openings whilst offering our customers compelling value. These efforts delivered an increase in sales and shareholder returns with continued robust profit growth. I would like to thank our world-class franchisees and colleagues for their immense hard work and dedication in achieving these results. In December I set out a framework for accelerating sustainable, long-term growth. Following a great year for store openings in 2023 we are accelerating our growth and expect to have 1,600 UK and Ireland stores delivering £2bn of system sales by 2028 and 2,000 stores by 2033 delivering £2.5bn of system sales. Crucially, we have alignment with our franchisees and there is a strong, motivated second generation talent coming through the franchisee ranks to help drive this growth. Since March 2021, we have taken a disciplined approach to capital allocation by following a clear framework. We have prioritised investment in the core business to drive growth and I’m excited that today we’re acquiring full control of Shorecal to accelerate our Irish growth. We see a significant opportunity to meaningfully increase our Irish store count and deliver long-term, sustainable returns. We are committed to a progressive dividend policy and I’m pleased that we have increased the dividend by 5%. DPG is a highly cash-generative, asset light business and we have been able to announce £427m of shareholder returns since March 2021, whilst also continuing to invest in the business. We are rigorously focused on accelerating organic growth and pursuing value enhancing inorganic growth opportunities, to build a larger and more cash generative business, at pace but with discipline. We look forward to providing an update on these opportunities later in the year.”