DJ 2nd UPDATE: Domino''s Sees Off Mkt Downturn;
Cautious On 2H
2:35 AM, July 21, 2008
By Monica Mark
Of DOW JONES
NEWSWIRES
Agriculture Online
3.7% higher Monday after the
increase in like-for-like sales and
a 17.2% jump in pretax profit for the first
half of the year, although it was
more cautious about the second half due to
tougher comparatives.
The company, which
runs 526 stores in the
been boosted by the opening of 25
new stores during the period, but strong
like-for-like sales growth suggests
consumers are still demanding takeaway
meals even as they reduce spending
on restaurant meals.
Domino's said pretax
profit for the 26 weeks to June 29 rose 17% to GBP9.7
million, from GBP8.3 million a year
earlier. Its system sales rose 19.5% to
GBP170.2 million, while like-for-like sales from its 450
mature stores rose
11%, down from 14.9% growth in the
year-earlier period.
"The trend that
we are witnessing so far is that many consumers are "trading
down", which in our industry
means that they are eating out less often and
staying at home," Chairman
Stephen Hemsley said in a statement.
He expects further
growth in the second half but warned that the company
faces tougher comparatives after a
strong set of results in the second half of
last year.
Altium
Securities analyst Wayne Brown said the group's performance was
"outstanding given we're
looking at incredibly strong comparatives."
"We've
increased our estimates by 12.5% since the start of the year to
reflect our confidence in the
group. They are showing great resilience in the
face of an economic downturn -
people are trading down but they're still
opening new stores," he said. Altium has a buy rating and target price of 285
pence.
Continued strong
cash generation has meant the company is returning plenty to
shareholders It confirmed it had
returned GBP7.7 million to its stockholders in
the first half through share
buybacks and dividends. It will raise its interim
dividend 42% to 2.7 pence-a-share.
"The benefits
of operational gearing continue to translate into strong cash
generation, significant returns for
shareholders and yet another record interim
dividend payment," Hemsley said.
The chairman said
Domino's was currently cushioned from rising food inflation
by fixed contracts. Further modest
price increases would be necessary early
next year, but "as these
pressures will be felt by all food providers from
supermarkets to restaurants, such
increases will not put us at a competitive
disadvantage," Hemsley said.
"We are on
track to open 50 new stores this year and although we are mindful
of the very strong comparatives in
the second half of the year, we are
confident of further strong growth
in system sales and profits and are well
placed to exceed market
expectations for the year," he added.
-By Monica Mark, Dow
Jones Newswires
agriculture.com