Domino's reports record growth for FY16
The company exceeded its Group guidance, reporting Network Sales of $1,964.1 million, up 32.7% on the prior corresponding period (PCP) and record underlying Net Profit After Tax (NPAT) of $92.0m, up 43.6% PCP.
The results come from significant organic growth yielding strong Same Store Sales (SSS), leveraging sophisticated digital platforms while adding 484 stores to the group.
According to the report, Domino's achieved double digital SSS of 10.9%, with Australia and New Zealand (ANZ) recording its second consecutive year of double digit SSS of 14.8%, while Europe reported strong Europe SSS of 8.2%. Group revenue for Financial Year 2016 (FY16) increased by 32.4% to $930.2 million, while the Company reported another year of excellent underlying EBITDA growth of $180.0 million, up 40.9% compared to the PCP.
These results have been consistent across the business with record Franchisee same store profitability in Europe and ANZ.
Domino’s ANZ record of an underlying EBITDA growth of 28.0% was attributed as a result of launching a range of disruptive digital initiatives such as the market-first ‘Project 3/10’, ‘15/20 Minute Service Guarantees’, ‘SMS ordering’ and ‘On Time Cooking’ (opt-in geo-location technology). Other market-first initiatives included the global launch of the world’s first autonomous delivery vehicle, Domino’s Robotic Unit (DRU), as well as ‘Smart Watch’ ordering in Australia, all contributing towards strong ANZ online sales growth of 33% Year on Year (YoY).
The company opened 49 new stores during the period, as well as the resumed the roll out of e-bikes, with over 600 now operating in stores, and the successful launch of the ‘More Than Just Pizza’ campaign with food innovation again playing a major role in the results.
“We are focused on improving technology, pushing safer, more efficient delivery, whilst investing in world class ordering platforms. A huge driver of this is our ‘Project 3/10’ and our ‘Slow Where It Matters, Fast Where It Counts’ philosophy, which have enabled stores to deliver in 10-12 minutes and reduce pick-up times to between 5-6 minutes,” said Group CEO and Managing Director Don Meij.
“We expect ‘Project 3/10’ to continue to be a significant sales stimulus over the next 3-5 years, with 10-minute delivery attracting drive-thru customers from our largest competitors.”
In ANZ, Domino's stated that it will focus on its core offering, food, with the broadest menu expansion since 2008. This will deliver a modern, new menu range inspired by quality ingredients including new pizzas, sides and desserts. This food-centric focus will also include the launch of two new food categories added to the Domino’s menu, to cater for all food occasions and appealing to a broader demographic of customers.
“We will continue to target the drive-thru customer with ‘Project 3/10’ which offers customers faster, safer delivery and world class ordering platforms,” Meij said.
“We are already seeing some incredible early results in stores with the goal to have more than 300 stores enabled to achieve ‘Project 3-10’ in FY17.”
Meij said the Company was increasing its future store count in the ANZ market from 900 to 1,200 to take advantage of the huge market opportunities.
“Due to the extraordinary growth being experienced in ANZ, the returns from investment in our program of digital initiatives and the capacity restraints in some areas of the region, we are confident that ANZ has the capacity for 1,200 stores, up from our previous guidance of 900 stores.”
Due to the company's positive momentum, the company is offering FY17 guidance of NPAT growth to be in the region of +30% and EBITDA growth to be in the region of +25%.
