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Domino's Pizza notes strong quarter; supply chain pressure continues

Thu, 14th Oct 2021 11:09

(Alliance News) - Domino's Pizza Group PLC on Thursday said it is trading in line with expectations as sales rose in the third quarter, despite changing VAT rates and continued supply chain pressures.

Shares in Domino's Pizza were trading down 1.1% at 381.60 pence each in London on Thursday morning.

System sales rose 9.9% to GBP375.8 million in the thirteen weeks that ended September 26, compared to GBP342.1 million in the same period last year.

Total system sales hit GBP1.13 billion in the year to September 26, up 16% year-on-year from GBP971.0 million in the same 39 weeks of 2020.

Excluding the impact of VAT, underlying system sales growth was 6.4% in the third quarter compared to 5.5% in the first half of the year.

System sales were somewhat affected by the temporary reduction in the UK rate of value added tax in response to the virus pandemic, Domino's said. The anniversary of the lower rate of 5% introduced on July 15, 2020 was lapped during the recent sales period.

The VAT rate increased back to 12.5% on October 1 and will return to 20% on April 1, 2022.

Domino's said the VAT rate changes have had limited impact on the company's profitability and didn't provide detail of the scale of the impact on system sales.

The company said orders grew by 9.5% year-on-year to 17.2 million transactions in the third quarter.

Order growth was driven by collection orders, Domino's said, which rose 40% since the year prior to 4.6 million transactions. Collection orders are now 82% of their 2019 level, the company added.

New ordering app accounts also increased, lifting to 42% of overall system sales, up 5.9% from the year prior.

Domino's also opened five new stores in the third quarter.

Although the company said it will continue to manage supply chain pressures, it expects them to continue into 2022.

Chief Executive Dominic Paul said: "We have delivered another strong quarter and demonstrated excellent momentum in the business...We have built on our strong performance through the pandemic as restrictions have been lifted, with our collections business continuing its recovery and our total order count growing in a profitable and sustainable way.

"Trading remains in-line with our expectations, we are well placed as we gear up for our peak trading period and believe our strategy is working to create sustainable value for all our stakeholders."

By Scarlett Butler; scarlettbutler@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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