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Domino's warns of loss in international business

Domino's warns of loss in international business
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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By Sangameswaran S and Noor Zainab Hussain

(Reuters) – Domino’s warned of a loss in its international business this year, sending shares in Britain’s biggest pizza delivery firm lower and eclipsing a rise in first-quarter group sales.

“Internationally, performance remains disappointing and trading visibility is limited,” Chief Executive Officer David Wild said, adding the company would tighten its focus on international costs and capital deployment.

Its shares were down 6.4 percent at 244 pence at 0755 GMT, off a low of 229.6 pence. They stumbled 34 percent in 2018.

The UK and Ireland account for 90 percent of its business and helped power a 4.5 percent rise in group sales to 324.4 million pounds for the first quarter to March 31.

Sales for Britain and Ireland rose 4.8 percent to 299.3 million pounds.

But the company has been focussing on its online and overseas businesses where it has struggled to control costs, especially in Norway where it is converting the Dolly Dimple stores acquired in 2017.

International sales fell 2 percent to 25.1 million pounds, Domino’s said, as it began cutting costs and spending in operations that also include Sweden, Switzerland, Germany, Luxembourg and Iceland.

The company, which had said in March it expected its international operations to break even, has also been negotiating with international franchisees on terms.

Analysts have said the company’s investment in its international operations run into hundreds of millions of pounds, while the business has not made money.

DOM’s track record overseas is not good; if it cannot run these countries profitably, then other master franchisees may think they can do better,” Peel Hunt analysts said. They cut their 2019 pretax profit forecast by 5 million pounds, assuming its international operations lose 6.4 million pounds versus a previous loss forecast of 1.4 million.

(Reporting by Sangameswaran S and Noor Zainab Hussain in Bengaluru; Editing by Shounak Dasgupta and Jason Neely)

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