Domino’s reinstates dividend as pizza chain hails ‘resilient’ lockdown sales
Pizza chain Domino’s reinstated its dividend payment as it hailed “resilient” trading during the UK coronavirus lockdown.
The figures
UK like-for-like sales were up 4.8 per cent and Ireland like-for-like sales increased 3.6 per cent during the first half of the year.
However underlying earnings before interest and taxes fell to £51.4m pounds for the six months ended June 28, from £52.8m a year earlier.
Domino’s announced a profit, including loss from discontinued international operations, of £19m, down from £22.4m in the first half of the year.
The deferred 2019 dividend of 5.56p per share, amounting to £26m, will be paid out on 18 September, the takeaway firm announced this morning.
The dividend payment was suspended at the beginning of the coronavirus pandemic in the UK.
However it did not recommend an additional interim dividend due to “considerable uncertainty ahead, including the risk of a second lockdown and an expected decline in consumer spending.”
Why it’s interesting
Domino’s reported £6.2m in costs related to the coronavirus outbreak as it banned collection orders, rationalised its menu and made changes to its supply chain. Costs are expected to decline to around £2m in the second half, the firm said.
Meanwhile trading in the first few weeks of the second half was “encouraging” as stores reopened for collection and Premier League football resumed. An increase in UK “staycations” and VAT reduction on hot food will also help boost Domino’s sales during the period.
New chief executive Dominic Paul, who joined the firm in March, updated investors on a long-running dispute with Domino’s franchisees over profit-sharing arrangements.
“We are working hard to build constructive relationships with our franchisees to regain trust, through being open and transparent at all times,” he said.
“We firmly believe that it is in all parties’ best interests to find a solution to this long-running situation.”
What Domino’s said
Chief executive Dominic Paul said: “I am pleased to report a resilient first half performance. Throughout these unprecedented times we have focused on doing the right thing for our customers, colleagues, franchisees and communities. We view it as a privilege to have been able to stay open throughout the period. I have been hugely impressed by the hard work, dedication and agility of our colleagues and our franchisee partners to keep Domino’s delivering, and I would like to say a big thank you to the entire team.
“We have an amazing brand, an exceptional supply chain, highly experienced franchisee partners and a dynamic and responsive model. The relationship with our franchisees is challenging and this situation dates back several years. Although I expect this to take some time to resolve, our performance during the period is a great demonstration of what we can achieve when we work together.
“Fundamentally our interests are aligned and I am hopeful that the long-term strategic plan we are currently working on will pave the way forward for a more constructive working relationship to the benefit of all parties.”