Domino's Pizza Enterprises held its annual general meeting, where it reported progress on simplifying its promotional offers and said the worst of its sales decline was easing, Yahoo Finance reported. Australian customers used close to 1500 distinct vouchers and coupons across a four-month period, with many leading to identical prices and outcomes.
The company said its reliance on discounting was excessive and that the large number of vouchers created confusion rather than trust with customers. A trial in Japan, where the range of distinct offers was substantially cut, produced measurably faster ordering, higher conversion and better customer satisfaction scores. Past strategy leaned too heavily on promotions and short-term limited offers, which generated only brief sales spikes rather than durable demand, and repeated changes to the offer create waste in the supply chain, undermine marketing effectiveness and complicate store operations for franchisees.
Underlying net profit after tax came in at $121.5m, and underlying EBIT came in at $200.1m for the period. Net debt fell by $227.8m, and net leverage dropped from 2.57 times to 1.86 times.
Chairman Jack Cowin said the company had set out a year earlier to build a stronger business and that tangible evidence of that progress could now be pointed to. By the time of the AGM, shares had pulled back to a decline of 0.31% at $22.19, paring an earlier fall that had exceeded 4% for much of the session.
Mike Sullivan, chief executive of the Australian Association of Franchisees, sent a letter warning that roughly 400 out of Domino's 6000 franchises have fallen behind on their tax obligations. Cowin described franchisee tax reports aired before the AGM as unfair.
Sandeep Reddy, Domino's US chief financial officer, told investors the company now expects international same-store sales growth to land approximately flat for the year, citing ongoing pressure from DPE. The US parent indicated in October that it was open to taking over Australian operations if sales continued to slow.
Franchisees operating Domino's stores face an environment where the company is reducing the range of promotional options available, which the company says will simplify store operations but represents a change to how customer demand has previously been generated.
Reporting: Yahoo Finance
Background: The Motley Fool Australia
Written by Pick & Scroll News from the reporting and documents linked above.
