Customers are paying more per pizza, but ordering less often, leaving investors cold on the Domino's franchisee's third-quarter update.
DP Poland (AIM: DPP) saw its shares slip 2% on Wednesday after a third-quarter trading update showed sales growth built on fatter order values rather than busier tills. The Domino's Pizza operator for Poland and Croatia reported total system sales in Poland up 10.4% year-on-year, though like-for-like sales growth slowed sharply to just 0.6%.
The soft like-for-like figure masked a less flattering trend underneath: order numbers in Poland fell 7.2% on a like-for-like basis, with the sales line only held up by customers spending more per visit. Trading was described as subdued through July and August before picking up again in September, suggesting the quarter's headline growth flatters a patchier underlying picture that unsettled holders.
Croatia provided the brighter spot, with system sales up 35% in the quarter, driven largely by new store openings rather than like-for-like strength, underlining how much of the group's growth currently depends on expansion rather than existing outlets trading better.
DP Poland continues to push its shift towards a franchise-led model, converting four more corporate stores into franchises during the quarter and lifting the franchised share of its network to 42%, with a stated ambition to pass 50% by the end of the year. It is also working through the integration of its acquired Pizzeria 105 stores.
Management said cash remained stable and reiterated that full-year trading was expected to meet market expectations, while pointing to a new customer app due in the fourth quarter as a lever to reverse the order volume decline. Investors will want to see that initiative, along with the franchise conversion push, start translating into firmer like-for-like order growth rather than reliance on higher ticket prices and new store openings.
This report is based on DP Poland’s announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full results calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: Jafetbyrne Photos on Unsplash.
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