Post by : Bianca
Haleem
Domino's Pizza Enterprises in Australia reported a weak start to the second half of the year, citing extreme weather in Germany and the Netherlands. The company’s shares fell more than 4% on Wednesday after a 7.2% drop in same-store sales during the first eight weeks of the second half. Analysts had expected only a 0.2% decline for the six-month period.
Domino’s operates stores across 12 countries including Australia, New Zealand, Asia, and Europe. In Australia and New Zealand, the company has reduced its reliance on national discounting and advertising to improve returns for franchise partners amid rising competition and slowing sales.
“We reduced reliance on discounting during the first half. Volumes moderated, as expected, but unit economics improved. That was a conscious trade-off to build a stronger system,” said Executive Chairman Jack Cowin.
This strategy, however, led to lower earnings for the first half, with group revenue dropping to A$1.10 billion from A$1.17 billion a year earlier.
Cliff Man, CEO at ETF Shares, commented, “The reset improves profitability in the near term, but unless revenue growth stabilises, the benefits of trading customer volumes for higher margins are likely to be temporary.”
Shares of Domino’s fell as much as 16.3% to A$18.13, marking the lowest level since November 3, before closing 4.4% lower. The stock was the top loser on the ASX200 index, which still hit a record high.
“The market reaction shows investors remain cautious about whether the company can shift from discount-driven growth to a margin-focused model without losing customers,” said Cliff.
Earlier this month, Domino’s largest master franchise in Australia appointed former McDonald’s executive Andrew Gregory as CEO, signaling a renewed focus on strategic leadership.
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