Domino's Pizza to exit international markets after 'disappointing' Q3
Domino's Pizza Group on Thursday said it will leave its international markets following a strategic review and a "disappointing" third-quarter performance.
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International system sales fell 3% to £25.3m on a reported basis, with Icelandic like-for-like sales dropping 8% due to a weak market, a decline in tourism and one planned store closure.
Sales fell 7% in Switzerland, where the FTSE 250 company saw a lower ticket and order count, while Norwegian sales remained flat after the response to a turnaround plan was weaker than expected.
Operations in Sweden bucked the trend as like-for-like sales increased 1% and local currency sales climbed 25% after a strong performance at six new stores in Gothenburg, though this was not enough to save the international business.
Chief executive David Wild said: "Over the past six weeks we have completed a review with external consultants, assessing each of our four international markets and the future prospects for our businesses. We have concluded that, whilst they represent attractive markets, we are not the best owners of these businesses.
"The board has therefore decided to exit the markets in an orderly manner."
Overall system sales rose 3% to £313.5m as sales in the UK and Republic of Ireland increased 4% despite challenging conditions and the impact of a franchisee dispute, which the takeaway pizza giant said will likely continue into 2020.
Online sales grew 7% for the UK and 10% in Ireland, accounting for 91% of UK delivery sales and 81% of total sales.
The company also announced the appointment of former Tim Hortons chief executive Elias Diaz Sese as an independent non-executive director with immediate effect.
At 1005 BST, the shares were up 3.8% at 275.90p.
Russ Mould, investment director at AJ Bell, said: "The people running the London-listed part of the Domino’s Pizza empire have had eyes bigger than their stomachs. A ferocious hunger for growth saw the business snap up the rights to numerous overseas territories which have unfortunately resulted in indigestion.
"Domino’s is now pulling the plug on its international operations after admitting defeat. This is the sensible thing to do. Management should be applauded for making the decision to pull out rather than digging themselves a bigger hole.
"The international interests were originally expected to break even this year but Domino’s said in August that losses were increasing in several territories and trading visibility was weak. Washing its hands of these problems should provide a tighter focus on the UK and Ireland interests.
"There is now a real opportunity to fix Domino’s which has lost its way in recent years thanks to over-expansion, deteriorating relationships with franchisees, international woes and heightened competition."