Domino’s Pizza to shut down 70 stores
Domino’s announces it will close up to 70 stores as part of plan to cushion falling profits
- The Australian pizza giant announced this on Tuesday
- Closures in place to help revenue
Domino’s has announced that it will close its construction and delivery division in Australia and 27 stores in Denmark.
Australia’s Domino’s Pizza Enterprises (DMP.AX) announced on Tuesday that up to 70 of its “underperforming” stores would close, sending its shares down as much as 11.9 percent in early trading to the bottom of the ASX 200- index.
The Australian franchise said the streamlining of operations would help improve pre-interest and tax revenue for fiscal year 2024 by $25 million to $30 million, compared to $113.9 million reported in the first half of 2023.
Domino’s has announced it is closing its construction and delivery branch in Australia, along with 27 stores in Denmark (stock image)
The Danish store closures represent 0.7 percent of Domino’s global footprint of 3,827 stores.
The pizza franchise also said it would cut between 65 and 70 of its “underperforming” company stores in a major “turnaround.”
The franchise said the closures would result in one-time costs of between $80 million and $93 million for fiscal 2023.
In February, the pizza giant posted its biggest drop in net profit since 2011 during the July-December 2022 half-year period on weak order growth.
The company also had marked its 2023 fiscal net profit after its $144 million fiscal expectation fell short of consensus.
“While the larger-than-expected restructuring could provide an earnings benefit starting in FY24, we expect the business model to remain under pressure unless the company can improve its customer value proposition and franchise profitability,” Citi analysts said in a note.
Domino’s said Tuesday it expected same-store sales in fiscal 2023 to remain below its medium-term outlook of 3% to 6% annual growth, even as the measure improved in the fourth quarter.