Dominos’ half-year profit falls despite cooking up sales increase

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Originally published via The Courier Mail

Pizza giant Dominos’ profits have dipped for the first half of this financial year on the back of legal costs for its Australian stores.

The company recorded a net profit of $53.3 million, a 9.3 per cent slide, despite a 14 per cent surge in sales for the six months to December 30.

The biggest hit to the bottom line were one-off legal costs to their Australian and New Zealand businesses and the rebranding of their German and French stores.

Shares in Domino’s dipped as much as 7.9 per cent to $42.29 at Wednesday’s open, and were trading at $42.50 at 1021 AEDT, the same level a year ago. The company’s share price had slumped to three-and-a-half year low of $38.70 in December.

Domino’s Australia and New Zealand boss Nick Knight said domestic growth, while outperforming Europe’s, had fallen short of management expectations.

Australia and New Zealand same-store sales rose 3.5 per cent, down from 3.7 per cent a year ago, and down from the 4.5 per cent full-year result in July.

“We’ve come through an unprecedented cost headwind and have been able to do so because of the close work with our franchisees and customers,” Mr Knight said in a release on Wednesday.

“We expected higher (Australian) sales growth and a performance better than we delivered, and we will be redoubling our efforts to do both in the months ahead.”

Same store sales rose 2.8 per cent in Europe and by an above-expectation 4.8 per cent in Japan.

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