Domino's shares soar on store closure plans
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More news: Shares in Domino's Pizza Enterprises have soared more than 21% to $35.97 in early trading on the ASX after the fast food retail group outlined plans to close 205 loss-making stores, mostly in Japan, as it undertakes a comprehensive strategy review to boost performance.
The company said the store closures and accelerated refranchising would result in annual savings of $15.5 million, sharpen market focus and improve profitability.
Domino’s Pizza flags first-half loss on store closures
The news: Fast food retail group Domino’s Pizza Enterprises has flagged a first-half loss after outlining plans to close loss-making stores, mostly in Japan.
The numbers: The company said it will close 205 loss-making stores, of which 172 are in Japan, resulting in one-off costs of around $97 million.
As a result, it would incur a statutory loss for the first half, but underlying profit before tax is expected to be between $84 million and $86 million, within its guidance range.
The context: Newly-appointed chief executive Mark van Dyck said a comprehensive strategy review is underway to boost performance, with focus on Japan and France. The strategy will look to simplify the store network and the cost base, and develop a refined market strategy to drive long term value.
Same stores sales growth was down 0.6% in the first half, with Europe and ANZ sales positive, but sales mixed in Asia as the Japan business weighed. The company said second half sales has started on a positive note, with same store sales up 4.3% in the first five weeks of the period.
Domino's, which owns and operates pizza stores in Australia, Asia and Europe, has faced narrowing margins amid a challenging economic environment, and previously announced store closures in Japan and France.
The source: ASX announcement
