Economy Overseas costs bite into Domino’s Pizza profits; shares slide

Overseas costs bite into Domino’s Pizza profits; shares slide

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Overseas costs bite into Domino’s Pizza profits; shares slide

 Domino’s Pizza Group (DOM.L) on Tuesday reported an increase in overall half-year sales, but profits were weighed down by investments overseas, sending its shares down almost 12 percent.The company has been investing in its online operations, which accounts for 79 percent of total UK sales. In addition, Domino’s has been focusing on its overseas operations, specifically Norway, where costs have eaten into profits.

“Whilst our international businesses continue to make good progress with customers and sales, it has taken us some time to refine the operating model and cost base at store level, particularly in Norway.”

Shares of Domino’s were down 11.8 pct at 0727 GMT, their lowest in more than 11 months.

Pre-tax profit rose 2.5 percent to 45.7 million pounds in the six-month period, offset by investments in Norway and Sweden, and rising interest costs from higher debt, the company said.

Statutory profit before tax was down 9.7 percent.

Net debt rose to 182.1 million pounds from 61 million pounds last year.

Britain’s biggest pizza delivery firm sold 8.2 million pizzas during the FIFA World Cup. UK sales rose 8.3 percent and overall sales climbed 12.8 percent in the six months ended July 1.

UK comparable sales rose to 5.9 percent from 2.4 percent in the previous year.

Domino’s is banking on order tracking technology for its delivery business so customers can track orders. A complete rollout of the technology is targeted by the third quarter of 2018. Last year, Dominos UK allowed customers to place orders from their Amazon (AMZN.O) Echo devices.

The company, which controls about 46 percent of the total UK pizza delivery market share, said online sales in Britain rose 14 percent for the half-year.

International sales rose, especially in Norway, which posted sales growth of more than 180 percent.