Today’s Falling Knife: Domino’s Pizza Group PLC. Burns By 7%

Domino’s Pizza Group PLC. (LON:DOM) set to transfer most of its German stores to franchisee hands.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Shares in Domino’s Pizza (LSE: DOM) fell more than 44p in early trade, as the company released its pre-close trading statement for the second quarter.

Like-for-like sales slipped marginally in the UK, a 6.1% increase following last year’s comparable 8.1% rise. However, system sales roles 11.7% to £147.6m, against £132.3m in FY2012.

The pizza company revealed that ecommerce — online and mobile — sales now account for 63.3% of first-half deliveries in the UK, compared to 52.4% in FY2012, with further rises expected with a new version of its website due in the second half of the year.

Internationally, system sales rose in the Republic of Ireland and Switzerland by 5.1% and 6.2% respectively. But it’s the German sector that disappointed the market this morning — losses are anticipated to be £2m-£3m more than previously expected, due to Domino’s corporate stores significantly lagging the performance of its franchise stores in the country.

As a result, the company plans to transition the majority of its corporate stores across to franchisee management as soon as possible, which will incur additional one-off costs. Chief executive officer Lance Batchelor commented:

“Corporate stores have allowed us to test menus, develop marketing plans and understand the German consumer – but now that the ground work is done, it is time to drive our German expansion using our tried and tested franchise model.

“We know the best way to get great results from stores is to put them in the hands of franchisees – and with five world-class franchisees now operating stores in the German market and more arriving shortly, we are excited about the future in this fledgling territory.”

Even with today’s top-slicing, Domino’s shares have jumped more than 25-fold since their 2002 low — and history dictates they could rebound once more. If you are keen to earn such handsome profits from shares, this free Motley Fool report — 10 Steps To Making A Million In The Market — can help you on your way. 

The report explains how tracking down small, dynamic companies is a vital step on the path to the magic million milestone. You never know, the next Domino’s Pizza could be out there right now ready to transform your wealth! Click here to get it completely free.

> Sam does not own shares in Domino’s Pizza.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Company Comment

Hand of person putting wood cube block with word VALUE on wooden table
Company Comment

Value has been building behind the Diageo share price

Despite the business growing, the Diageo share price first reached its current level just over 19 months ago and hasn't…

Read more »

Older couple walking in park
Investing Articles

5 stocks to buy for high and rising dividend income

I can see a host of shares to buy on the FTSE 100 offering me exceptional levels of income. Here…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

I don’t care if FTSE 100 shares fall further, I’m buying them today

I'm happy to go shopping for FTSE 100 shares today, even though I accept that they could have further to…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

Rolls-Royce shares are down 18% in a month and I’m finally going to buy them

Investors who bought Rolls-Royce shares have been repeatedly disappointed, but I'm willing to take a chance on them before they…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

How I’d invest £10k in a Stocks and Shares ISA today

Now looks like a good time to buy cheap FTSE 100 shares inside a Stocks and Shares ISA. These are…

Read more »

Black father holding daughter in a field of cows
Investing Articles

Today’s financial crisis is the perfect moment to buy cheap shares

I'm building a portfolio of FTSE 100 stocks by purchasing cheap shares whenever I see an opportunity. There's a good…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

I’d buy Tesco shares in October to bag their 5.4% yield 

Tesco shares have fallen lately but I think this makes them attractively valued for a dividend stock I would aim…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

I would do anything to hold Diageo in my portfolio (but I won’t do that)

Diageo is one of my favourite stocks on the entire FTSE 100 and I'd love to hold it, but one…

Read more »