Dominos Pizza Enterprises Ltd revealed its fiscal year 2023 financial outcomes

Domino’s Pizza Enterprises Ltd (ASX: DMP) has outlined its strategy for the current financial year, focusing on rebuilding franchisee and Group profitability by attracting more customers and increasing market share through innovative products and services that offer everyday value. The company recently released its FY23 financial results, revealing that total food sales grew by 2.2%. However, EBIT (Earnings Before Interest and Taxes) saw a substantial decline of -23.3%. The growth in total sales was driven by higher menu prices, but this was offset by a decrease in the number of meals sold.

This decision was made to safeguard the sustainability of more than 1,000 franchisee partners who were grappling with significant inflationary pressures. At the start of FY23, Domino’s faced unprecedented levels of inflation, including rising costs for food, labour, and energy. In response, the company initially absorbed some of these cost increases to protect store profitability.

However, as customer ordering frequency declined, Domino’s experienced a further reduction in food volumes, and the company faced additional margin pressure due to operating deleverage. Despite the challenges, Group revenue increased by 3.4% to AU$2.37 billion. Nevertheless, underlying EBIT decreased by -23.3% to AU$201.7 million.

In the early stages of FY24, Domino’s has already seen strong sales growth in Europe (+6.6% SSS) and Australia/New Zealand (+6.6% SSS). Both markets are focusing on achieving higher order volumes to enhance unit economics and Group profitability. However, Asian sales growth (-7.8% SSS) has not met expectations.

To reward shareholders, the company declared an unfranked final dividend of 42.6 cents per share for FY23. Domino’s has also activated its Dividend Reinvestment Plan for eligible shareholders residing in Australia or New Zealand, which will be fully underwritten by Morgan Stanley. The FY23 full-year dividend of 110.0 cents per share represents a -29.7% decrease from FY22.

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