Domino's growth cools amid consumer uncertainty

Domino's Pizza reported a sharp slowdown in UK sales growth and trimmed its profit outlook after "evident uncertainty" among UK consumers and the summer heatwave.

The fast-food company said like-for-like sales rose by 2.2% in its June-September quarter, down from 4.7% in the previous three-month period and 8.1% in the same quarter last year.

It revised the outlook for underlying pre-tax profits for 2018, saying they would be in the mid-range of the latest market expectations of £93m-£99.6m and little changed on the year before.

That is slightly lower than the range of £95.9m- £101.4m previously set out in August.

Chief (Taiwan OTC: 3345.TWO - news) executive David Wild said: "Our businesses continue to trade well, despite the evident uncertainty among UK consumers, and hot weather across Europe for much of the quarter."

Domino's added that it was planning to hire 5,000 additional workers to meet demand over the Christmas period.

The cooling UK sales picture did little to dampen the appetite for investors as the group said it was still on track to open 60 stores this year and set out plans to buy back shares worth £25m.

That helped send shares more than 5% higher by the close of trading.

Domino's said online sales in the UK were up 11.4% in the period and represented more than three-quarters of the total - as it seeks to fend off competition from the likes of Just Eat (Frankfurt: A1100K - news) and Deliveroo.

About 90% of sales in the quarter were in the company's main UK and Ireland (Other OTC: IRLD - news) markets but it said it remained "very excited" about the potential of its international business.

Domino's expects that part of its operation, which spans Switzerland, Iceland, Norway, Sweden and Germany, to break even for the full year.

The group now has 1,236 outlets group-wide including more than 1,000 in the UK. It is separate from the US version of the brand franchise.

The latest update from the company comes at a time when food outlets have faced cost pressures due to an increased minimum wage and more expensive ingredient imports because of the weak pound.

Squeezed household budgets have also put the sector under pressure, with casual dining chains such as Byron, Strada and Prezzo having to shut branches and shed workers.