Published by Global Banking and Finance Review
Posted on February 7, 2025
By John Biju
(Reuters) - Shares of Australia's Domino's Pizza Enterprises were heading for their biggest intraday jump ever on Friday, after the pizza chain operator flagged the closure of 205 loss-making stores and signalled a positive start to the second half of fiscal 2025.
The company's stock rose as much as 23.8% to A$36.68 as of 0011 GMT, heading for its strongest gain ever, and hit its highest level since October 21, 2024. The benchmark ASX200 index was largely unchanged.
The company expects annual savings of approximately A$15.5 million ($9.74 million) from the closure of 205 loss-making stores aimed at improving profitability and sharpening market focus.
The closure plan includes 172 stores in Japan, where Domino's has struggled with declining post-pandemic demand and higher input costs. Japan accounts for a quarter of the company's total 3,733 stores worldwide.
"Some of our COVID-period expansion resulted in stores that simply weren't optimal based on our current customer proposition and removing them will strengthen our network," said the group Chief Executive and Managing Director Mark van Dyck.
The Japanese store closures will result in a one-off restructuring cost of A$61.8 million but are expected to provide a boost of A$10 million to A$12 million to its operating earnings annually, the company said.
The company also signaled a positive start to the second half of fiscal 2025, recording same-store sales growth of 4.3% across the group in the first five weeks.
"It is all about future proofing the business. It's a market leader and is expected to continue to grow revenue to new records over the coming years," said Jessica Amir, a market strategist at Moomoo.
Domino's said it expects underlying net profit before tax for the first half of fiscal 2025 to be between A$84 million and A$86 million, within its earlier forecast range.
The company also intends to declare an interim dividend of 55.5 Australian cents per share, in line with last year's dividend.
($1 = 1.5921 Australian dollars)
(Reporting by John Biju in Bengaluru; Editing by Alan Barona)
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