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(Sharecast News) - DP Poland, the master franchisee of the Domino's Pizza brand in Poland and Croatia, reported robust sales growth in its first half on Friday, amid store openings, refurbishments, and investments in its infrastructure.
The AIM-traded firm said that in Poland, it experienced a surge in business during the second quarter, with like-for-like system sales increasing by 16.8% compared to the same period in 2022.
It put the growth down to a substantial increase in order counts.
Overall, the first half showed a healthy increase in system sales of 14.9% compared to the prior year, with like-for-like Sales in the six months ended 30 June up by 18% versus 2022.
While inflationary pressures in food and energy had started to recede, labour markets were still feeling some inflationary effects.
Despite those challenges, DP Poland said it remained confident in its current trading strength, underpinned by higher order counts.
DP Poland's expansion plans included the opening of two new stores in each of Poland and Croatia during the first half, with three additional store openings planned for the second half.
The company said it had also successfully completed four store refurbishments in the first half.
As part of its ongoing efforts to enhance operations, DP Poland said it had also invested in an updated scooter fleet and IT system improvements.
As at 40 June, DP Poland reported having £2.5m in cash at the bank, representing a decrease from the £4.1m it recorded on 31 December.
In the Croatian market, DP Poland faced initial challenges due to the transition of the national currency from the kuna to the euro at the beginning of 2023.
The change, coupled with inflationary effects, led to weaker sales in January.
However, since February, Croatia had seen strong double-digit like-for-like sales growth, except for a temporary drop in June, which was influenced by two long public holiday weekends.
First half system sales in Croatia rose by 44.5% compared to the first-half of 2022, partly benefiting from the third store opening in June last year.
Additionally, like-for-like sales also showed strong growth, with a 10.2% increase over the prior period.
To address cost concerns, DP Poland's Croatian business had taken advantage of group purchasing benefits, contributing to reducing direct costs.
Looking ahead, DP Poland said it had plans to open a fifth store in Croatia at the end of the third quarter, following the successful launch of the fourth store at the end of June.
"I'm delighted to announce record sales in the first half of 2023 - like-for-like sales in Poland increased 18% compared with the prior year, supported by order count growth of 11.3%," said chief executive officer Nils Gornall.
"We have continued to execute on our strategy of building a 'high volume mentality' business, delivering a compelling value proposition for our customers based on fantastic quality pizza delivered quickly.
"These efforts have resulted in an improvement in customer satisfaction ratings and increased consumer loyalty which place the business in a strong position to capitalise on the strong potential we see in both Poland and Croatia."
At the same time, Gornall said the company had improved its footprint by the opening of one store and the full refurbishment of four stores in Poland, as well as opening its fourth store in Croatia.
"We expect to open another two stores in Poland and one in Croatia by the end of this year.
"High inflation in energy and food have eventually started to abate in May, and whilst labour rates are still under inflationary pressures we are constantly focusing on further optimization projects.
"We expect performance to continue improving and remain optimistic about the outlook for the group."
At 1325 BST, shares in DP Poland were down 1.3% at 7.6p.
Reporting by Josh White for Sharecast.com.
