SYDNEY, Aug 14: Australian fast-food chain Domino’s Pizza Enterprises Ltd posted its slowest profit growth in five years on Tuesday, missing expectations, as a heatwave sent Europeans to cafes rather than pizza shops and earnings from Japan fell.
Although annual profit hit a record, it was the second year in a row that the one-time market darling fell short of its own guidance, prompting investors to question the longevity of its growth strategy, and sending its shares tumbling.
“They’re probably thinking this is the start of the slide,” said Mathan Somasundaram, market portfolio strategist at Blue Ocean Equities, after Domino’s stock dropped 9 percent to a near two-month low in a rising market.
“Early in their story, the market was paying for future growth and that worked well. But in the last two years, it’s been the perfect growth market and Domino’s has actually gone the other way.” The largest Domino’s franchisor outside the United States also gave no profit forecast. It was looking for acquisitions to bolster same-store sales growth it otherwise predicts to be steady at 3-6 percent for three to five years.
(AGENCIES)
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