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Domino’s Pizza downgraded its full-year profit forecast as consumers grappling with cost of living pressures held back on spending earlier in the year, leading to lacklustre order numbers.
The London-listed UK franchise of the US pizza delivery group said on Tuesday that its underlying core profit would be “towards the lower end of the current range of market expectations”. In March it guided that profits would be in line with market forecasts.
The downward forecast is partly due to the “slower start” to the first half of the year. Total collection and delivery orders during the period fell 0.9 per cent to 35.1mn compared with a year earlier, dragged down by a 2.6 per cent decline in delivery orders. Sales from existing stores were down 0.5 per cent.
However the company’s fortunes improved from the middle of May, according to chief executive Andrew Rennie. Domino’s “halted the trend of declining delivery orders” following 10 consecutive quarters of decline, boosted in part by the Euro 2024 football tournament but also by the launches of a £4 lunch offer and new products.
Domino’s posted group revenue of £326.8mn for the first half of the year, down 1.8 per cent on the same period last year, with underlying core profit of £69mn, up 0.4 per cent.
Domino’s latest forecast comes after the company unveiled bullish new growth targets. In March, it said it expects to have more than 1,600 UK and Ireland stores by 2028, and more than 2,000 by 2030, compared with more than 1,300 stores today.
Data from Barclays has shown that consumer spending on takeaways and fast food is declining. The category was one of the best performers coming out of lockdown, but that growth has now tapered off and even slipped into decline in May, dropping 0.2 per cent.
Domino’s, which reduced its marketing spending particularly in January to invest in a new loyalty programme, said the first quarter and April were “challenging driven by a slower delivery market”.
