Domino's Australia franchise surges on store closures, upbeat start to second half of fiscal 2025

Dominos Pizza Enterprises

07/02/2025 24:34

By John Biju
       Feb 7 (Reuters) - Shares of Australia's Domino's Pizza
Enterprises  DMP.AX  were heading for their biggest intraday
jump ever on Friday, after the pizza chain operator flagged the
closure of 205 loss-making stores and signalled a positive start
to the second half of fiscal 2025.
    The company's stock rose as much as 23.8% to A$36.68 as of
0011 GMT, heading for its strongest gain ever, and hit its
highest level since October 21, 2024. The benchmark ASX200 index
 .AXJO  was largely unchanged.
    The company expects annual savings of approximately A$15.5
million ($9.74 million) from the closure of 205 loss-making
stores aimed at improving profitability and sharpening market
focus.
    The closure plan includes 172 stores in Japan, where
Domino's has struggled with declining post-pandemic demand and
higher input costs. Japan accounts for a quarter of the
company's total 3,733 stores worldwide.
    "Some of our COVID-period expansion resulted in stores that
simply weren't optimal based on our current customer proposition
and removing them will strengthen our network," said the group
Chief Executive and Managing Director Mark van Dyck.
    The Japanese store closures will result in a one-off
restructuring cost of A$61.8 million but are expected to provide
a boost of A$10 million to A$12 million to its operating
earnings annually, the company said.
    The company also signaled a positive start to the second
half of fiscal 2025, recording same-store sales growth of 4.3%
across the group in the first five weeks.
    "It is all about future proofing the business. It's a market
leader and is expected to continue to grow revenue to new
records over the coming years," said Jessica Amir, a market
strategist at Moomoo.
    Domino's said it expects underlying net profit before tax
for the first half of fiscal 2025 to be between A$84 million and
A$86 million, within its earlier forecast range.
    The company also intends to declare an interim dividend of
55.5 Australian cents per share, in line with last year's
dividend.
    

($1 = 1.5921 Australian dollars)

 (Reporting by John Biju in Bengaluru; Editing by Alan Barona)
 ((John.Biju@thomsonreuters.com))