Strong results for Domino's Pizza Group in UK fail to prevent profit slump
Strong results for the UK arm of the Domino's Pizza Group during the interim period to 30 June 2013 failed to prevent profit before tax falling by nearly 50%.
Like-for-like sales growth increased in the UK by 6.4%, compared with 5.7% in 2012, but profit for the company across all of its 825 stores in the UK, Ireland, Germany, Switzerland, Liechtenstein and Luxembourg. fell to £11.6m from £21.5m the previous year.
An initial slow start to Domino's new business in Germany, where the company acquired the master franchise to own, operate and franchise Domino's Pizza stores in April 2011, was cited as the reason for the fall in profits. As a result, shares in the company fell by 5% yesterday.
Stephen Hemsley, Domino's non-executive chairman, said that the process of establishing the business in Germany had taken longer than expected. "Germany is a true start up, in one of the most exciting markets in Europe," he explained. "It will take time to reach scale there, to build enough brand awareness and open sufficient stores to cover our fixed costs.
"Those of us with long memories will recall that it felt similar in the UK back in the 1990's and we have been through this before."
Hemsley also announced that Lee Ginsberg, Domino's chief financial officer, Lee Ginsberg, will be retiring from the business at the 2014 annual general meeting after a decade with the company. The search has began for his successor, with Ginsberg agreeing to help with the recruitment and handover.
