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Domino's sees profit at lower end of range, shares down

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Domino's sees profit at lower end of range, shares down
FILE PHOTO: A call out mechanic fixes a Dominos delivery scooter in the Clapham district of London, Britain June 8, 2018. REUTERS/Simon Dawson   -   Copyright  SIMON DAWSON(Reuters)
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(Reuters) – Domino’s Pizza, Britain’s biggest pizza delivery firm, said on Tuesday it expects full-year underlying pretax profit at the lower end of a consensus range, despite selling a record number of pizzas on the Friday before Christmas.

The company’s shares were down 5.4 percent at 261.1 pence at 0800 GMT, taking them to the bottom of London’s midcap index.

Casual dining chains in Britain continue to face higher expenses from a rise in the national living wage and food costs amid a slowdown in consumer spending due to uncertainty about Britain’s impending exit from the European Union.

Domino’s Pizza, a franchise of U.S. company Domino’s Pizza Inc, said it plans to invest in other European markets, but added that the move would hit overall profitability in the short term. Sales in its international markets rose 1.6 percent on a constant currency basis during the fourth quarter.

“Our international businesses offer significant long term potential, but we have experienced growing pains this year, particularly in Norway, where we have faced business integration challenges,” Chief Executive Officer David Wild said.

The company said it expects its international operations, which includes countries such as Germany and Luxembourg, to break even in 2019.

The popularity of the company’s cheeseburger pizza fuelled record sales of more than 535,000 pizzas, which equates to 12 every second, on the Friday before Christmas.

Sales at UK stores open for over a year rose 4.5 percent during the 13-week period ended Dec. 30, as cash-conscious diners in the firm’s home market are increasingly ordering in through smartphones.

Underlying pretax profit was previously expected to be between 93.9 million pounds and 98.2 million pounds ($129.15 million – $123.50 million), the company said. It reported underlying pretax profit of 96.2 million pounds in 2017.

($1 = 0.7603 pounds)

(Reporting by Karina Dsouza and Noor Zainab Hussain in Bengaluru; Editing by Saumyadeb Chakrabarty)

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