'This company is not in disarray': Domino's exec chair Jack Cowin defends CEO departure
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More news: Domino's Jack Cowin has defended the business after he was forced to step in as executive chair following the sudden resignation of its CEO Mark van Dyck, indicating the business would need to slash costs more quickly.
What they said: Speaking on an investor call, Cowin said the "company is not in disarray" despite what some in the market were saying as he faced a barrage of questions on why van Dyck left.
"This was Mark's decision to resign. He was not pushed or asked to leave," Cowin said, adding that the board had accepted the five-year strategy he put together.
"There's a lot of work that has to be done and I think he made an assessment that the cost reduction program, the travel in these different markets, is not easy. So, you know, he decided to resign."
Cowin indicated that the disagreement came rather on the pace of change with the board motivated to see costs cut quicker.
"Even though there's some positive results that are starting to emerge in the business, we've got no guarantee that we will have a sales driven recovery. We hope we can [but] if that is not able to be done, then the second alternative is that we do have control over is the cost structure of the business," Cowin said.
"That will be something that we are taking active steps on to make sure that we can deliver the results that this company needs in order to be financially viable."
He suggested that the company was aiming to get same store sales growing by around 3% over the next 12 months which was "not mission impossible".
"We've had flat results, where this is going into the fourth year, which is unacceptable," Cowin said.
While he blamed delivery services like Uber for putting further cost pressure on food businesses, he rejected the idea that consumer tastes had moved away from pizza and towards healthier food options.
"We just have to continue to find a better way to be more competitive, you know, and run this business better, but do it on a more cost effective way than what we may have done in the past," he said.
Domino's swings to red as it flags investor call on CEO exit
The news: Domino's shares erased early gains after the pizza chain announced that executive chair Jack Cowin and incoming finance chief George Saoud would provide an update to investors this afternoon, following the surprise resignation of CEO and managing director Mark van Dyck on Tuesday.
The company said Cowin and Saoud will provide an update on the situation at 3:30pm AEST, ahead of a live Q&A.
Domino's shares were down 0.9% to $16.80 at 2:20pm AEST. They jumped nearly 5% in early trading after shedding around 16% on Tuesday.
Domino's rallies as Morningstar calls shares 'materially undervalued'
The news: Domino's shares rallied in morning trade, after dropping nearly 16% on Wednesday following the resignation of CEO and managing director Mark van Dyck.
The numbers: Shares were up 3.7% to $17.58 at 11:30am AEST, having tumbled more than 40% since the turn of the year.
Morningstar cut its fair value estimate on Domino's by 21% to $46 but analyst Johannes Faul called the shares "materially undervalued".
Faul said van Dyck's departure will likely delay Domino's global network expansion. Morningstar now expects the company's store count to reach 5,400 stores by fiscal 2034, down 7% from its previous estimate of 5,800 stores.
The context: Faul said "uncertainty is now likely to weigh for longer", after Domino's confirmed that chair Jack Cowin will step in as executive chair while the company searches for van Dyck's permanent successor.
However, the analyst noted that "while the growth story has stalled", significant expansion opportunities remain in Europe and Asia.
The source: Morningstar research
