Domino's to sell 115 overseas branches – but plans to open more UK stores this year
THE British arm of Domino's is planning to sell its loss-making European outlets – but is still opening UK stores.
So far this year Domino’s has opened 20 new outlets in the UK and boss David Wild says more will follow.
The London-listed pizza delivery business has announced that its arms in Iceland, Norway, Sweden and Switzerland will be put up for sale after losses increased.
"We have concluded that, whilst they represent attractive markets, we are not the best owners of these businesses. The board has therefore decided to exit the markets in an orderly manner," outgoing CEO David Wild said.
The branches affected are: 57 in Norway (10 of which are under the Dolly Dimple's brand), 24 in Iceland, 22 in Switzerland and 12 in Sweden.
The exit will allow the firm – which is separate from US Domino’s – to refocus around its core UK and Ireland operation where it is still opening stores despite a row with its franchisees and intensifying competition.
In the UK – where it has just over 1100 branches – sales rose 3.9 per cent to £288.2million in the third quarter. Overseas, they fell 2.7 per cent.
So far this year Domino’s has opened 20 new outlets in the UK. More will follow according to Wild, who said the firm traditionally opens more in the second half of year.
However, he declined to put an exact figure on the number of new sites which are unnamed aside from Stoke Newington in North East London.
Each branch creates around 30 jobs.
So what went wrong for Domino’s overseas?
ANALYTS at AJ Bell reckon the firm bit off more than it could chew.
Russ Mould, investment director, says: “The people running the London-listed part of the Domino’s Pizza empire have had eyes bigger than their stomachs. A ferocious hunger for growth saw the business snap up the rights to numerous overseas territories which have unfortunately resulted in indigestion.
“Domino’s is now pulling the plug on its international operations after admitting defeat. This is the sensible thing to do. Management should be applauded for making the decision to pull out rather than digging themselves a bigger hole.”
The international interests were originally expected to break even this year but Domino’s said in August that losses were increasing in several territories and trading visibility was weak. Washing its hands of these problems should provide a tighter focus on the UK and Ireland interests.
“There is now a real opportunity to fix Domino’s which has lost its way in recent years thanks to over-expansion, deteriorating relationships with franchisees, international woes and heightened competition," Mould says.
He continues: “For years this was a great business, generating lots of cash and finding a way to sell more pizzas each year. It is now looking for a new chief executive and a new chairman, meaning we could get some fresh thinking on strategy very soon.
“It wouldn’t be surprising to see a ‘back to basics’ approach and a focus on getting things right with the existing estate rather than finding new avenues for growth.”
Domino's is continuing its hunt for a new boss with Mr Wild, who has led the pizza delivery chain since 2014, set to step down.
Competition from new players, notably Deliveroo and Uber Eats, has eaten into a delivery market traditionally dominated by pizza.
But Domino's fans may be in for a shock, as its pizzas alongside McDonald’s, KFC, and Nandos meals could be BANNED if new NHS calorie counts are given the green light.
In better news, Domino's has already splurged £7million on stockpiling toppings for a No Deal Brexit.
Meanwhile, you can get £20 worth of Domino’s for £10 with a special code.
In other business news:
GO WEST: WH Smith is pushing deeper into the travel market by buying Marshall Retail in the US for £312 million – but stands by its 576 UK stores. It means WH Smiths now has a further 170 stores in North America, including 59 in airports, with the remaining in busy tourist hotspots including Las Vegas.
ICE CREAM COOLS: Unilever has missed City growth forecasts after a slowdown in key international markets – and weaker growth in ice cream such as Magnum and Ben & Jerry’s. The maker of Magnum and Ben & Jerry's also failed to match strong ice cream sales in 2018 due to cooler summer temperatures this year in Europe.
ENERGY BOOM: Moneysupermarket has been boosted by an increase in the number of Brits switching energy suppliers despite the price cap on tariffs. The platform said that revenue from its home services division, which is mainly energy, rose 21 per cent compared to the same period last year, to £17.7 million.
PPI-HIGHER: The Financial Conduct Authority has today published the complaints figures for regulated firms for the first half of 2019. The data from the City watchdog showed an increase in complaints from 3.91 million in the second half (H2) of 2018 to 4.29 million for the first half (H1) of 2019, driven by PPI.
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