Domino's keeping foot on the pedal

Like-for-like (LFL) sales growth at pizza delivery firm Domino's Pizza has tailed off a touch in the last six weeks, but online sales are booming.

LFL year-on-year sales growth in the 13 weeks to March 25th was 3.5%, a slow-down from the 3.7% growth rate seen in the first seven weeks of the year, and lower than LFL growth of 4.2% seen in the corresponding period of 2011.

LFL sales in the 13-week period were up 3.6% in the UK (2011: +5.5%) and up 1.7% in the Republic of Ireland (2011: -10.5%).

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"It is especially pleasing to see sales in the Republic of Ireland return to positive territory," said Lance Batchelor, Chief Executive Officer of Domino's.

Total sales, including recently opened outlets, rose 9. 0% to £144.2m from £132.3m the year before.

The company continues to enjoy strong online growth, with e-commerce sales accounting for 50.6% of UK delivered sales (2011: 39.3%) in the 13 week period.

Total online sales for the period were up 44.5% to £59.3m (2011: £41.3m) and, of this, 16.4% was taken through one of Domino's variety of mobile platforms.

The company's relentless expansion is set to continue, raising the possibility of new stores cannibalising existing stores' sales, which is why the relatively recent excursion into Germany is seen by many observers as a key component of future growth prospects.

"We are pleased with the progress being made in Germany and have successfully integrated the comprehensive market research conducted by the company in the early months of operation with our robust UK practices. This is beginning to pay off with the right menu now in place, good demographic information and a clear road-map as to how we will develop in the territory," the company statement said.

In the first quarter of 2012 the company has opened six new outlets, which is fewer than the eight it opened in the first quarter of 2011. The company is confident of achieving the target of 72 new stores during the full year, of which 12 are planned in Germany.

"We have identified a number of great locations in the more affluent west of the country [Germany] and the first of 12 new stores for 2012 is already under construction. In addition, discussions are continuing with a small number of excellent German and UK franchisees who will play an important role in our expansion," Domino's said.

"We may have a softer comparative for the second quarter of the year - but we will not be taking our foot off the accelerator," pledged Batchelor.

"We have a number of marketing initiatives and other programmes aimed at ensuring our franchisees can profitably grow their businesses in the coming months. This, combined with a full pipeline of potential new sites, expansion in Germany, a strong management team in place and our ever improving operational gearing, makes me confident and optimistic about the months and years ahead," Batchelor said.

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