Domino’s Pizza report system sales of £1,499.1m for 2021 with profit after tax at £78.3m

Domino’s Pizza Group plc (LON:DOM) have provided full year results for the 52 weeks ended 26th December 2021.

The company says it was a transformational year: robust trading, excellent strategic progress, resolution with franchisees and significant returns to shareholders.

Financial highlights

·     Continued strong momentum, with system sales of £1,499.1m, up 11.2%. Like-for-like system sales, excluding splits, up 10.9% (9.8% including splits)

·      Underlying like-for-like system sales (excluding the temporary benefit of VAT) grew by 5.5%, 150 basis points higher than last year’s equivalent figure of +4.0%

·      Underlying profit before tax of £113.9m, up £12.7m driven by strong underlying trading

·      Statutory profit after tax of £78.3m, up £38.6m due to significantly reduced international losses

·      Continued strong free cash flow of £104.6m (2020: £99.0m)

·      Net debt of £199.7m, in-line with guidance, resulting in a net debt / underlying EBITDA leverage ratio of 1.54x

·      Additional £6.6m investment in a new Northern Ireland Joint Venture

·      £136m returned to shareholders in FY21 through dividends and share buybacks and £14.3m of capex to support store growth

·      Proposed final dividend for FY21 of 6.8p per share to be paid on 10 May 2022, resulting in a total dividend for FY21 of 9.8p per share, +7.7% vs. FY20

·      New £46m share buyback programme, effective imminently, in line with capital allocation framework and commitment to distribute surplus capital to shareholders

Operational and strategic highlights

·      Good growth in total orders, up 5.5% in the year. Delivery performed well, and collections continued to recover, growing sequentially each quarter. Collections finished the year at 87% of 2019 levels

·      Excellent service standards with average delivery times of around 25 minutes

·      Now a truly digital-first business with 91.2% of sales through digital channels, new App launched which now accounts for 42% of system sales (+2.2pts vs. 2020)

·      Opened 31 new stores in the year with new stores trading ahead of expectations. On track to open at least 45 new stores in FY22

·      Reached resolution with our world-class franchisees heralding a new era of collaboration. First national price campaign for several years launched in January 2022, five new stores opened in FY22 vs. one in the same period in FY21

·      With the franchisee resolution, increased our medium-term targets to at least the upper end of £1.6bn – £1.9bn system sales and to exceed 200 new stores

·      New integrated media campaign, ‘Domin-Oh-Hoo-Hoo‘, targeting families and friends reuniting post lockdown and followed by first ever festive TV ad campaign, which resulted in order count growth ahead of expectations

·      Continue to strengthen the Leadership Team with appointment of a new Chief Marketing Officer and Operations Director. New People Director starting in March 2022

·      Opened our third UK supply chain centre in Cambuslang, Scotland

·      Completed exit from all directly operated international markets allowing us to focus on the core UK and Ireland markets

Current trading and outlook

As previously guided, we expect FY22 underlying EBITDA and EPS to be in line with current market expectations. Trading in the first quarter has started well, aided by our first national price campaign for several years, made possible because of the resolution with our franchisees. Overall order count and customer acquisition continues to be positive, despite being up against a comparative quarter last year when there were strict lockdown restrictions in the UK.

Our flexible and robust business model means we are well placed to adapt to changing market conditions and ongoing challenges related to inflation and recruitment. As such, we continue to expect an acceleration in underlying system sales growth (excluding the benefit of the reduced rate of VAT), largely driven by increased store openings and like-for-like growth due to the operating and capital investments associated with the franchisee resolution and continued implementation of our strategic plan.

Commenting on the results, Dominic Paul, Domino’s Pizza Chief Executive Officer said:

“This was a transformational year for Domino’s. Our performance continues to be strong, and we have made significant progress against our strategic plan, all while delivering on our ambition to return excess capital to shareholders. None of this would have been possible without the hard work of our franchisees and my fantastic colleagues.

“There were two major milestones in the year. First, the launch of our new strategy, which is already delivering outstanding results and a better experience for our customers. Secondly, the resolution with our franchisees which has unlocked further potential within the system. Our franchisees are world class operators and the whole team is already embracing a new era of collaboration, with the system working together more closely than ever before.

“This year has started well, and we now have the right strategy and a strong senior team in place to continue to drive the business forward. We remain focussed on accelerating the sustainable growth of our system together, to deliver a better future through food people love.”

Notes

¹ System sales represent the sum of all sales made by both franchised and corporate stores to consumers in UK & Ireland

² Like-for-like excluding splits system sales performance is calculated for UK & Ireland against a comparable 52-week period in the prior period for mature stores which were not in territories split in the current period or comparable period. Mature stores are defined as those opened prior to 29th December 2019

³ Underlying is defined as statutory performance excluding discontinued operations, and items classified as non-underlying which includes significant non-recurring items or items directly related to merger and acquisition activity and related instruments as set out in note 4 to the financial information

⁴ Net debt is defined as the bank revolving facilities, cash and cash equivalents and other loans, including balances held in disposal groups held for sale