Today’s Falling Knife: Domino’s Pizza Group PLC. Burns By 7%

Domino’s Pizza Group PLC. (LON:DOM) set to transfer most of its German stores to franchisee hands.

Sam Robson

I've been a Fool for over a decade, and am proud to currently call myself the Editor in Chief of TMF UK. I follow Foolish investing principles, and buy shares in quality companies throughout both bull and bear markets!

Published 3 July, 2013 9:39 am BST

| More on: DOM

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Shares in Domino’s Pizza (LSE: DOM) fell more than 44p in early trade, as the company released its pre-close trading statement for the second quarter.

Like-for-like sales slipped marginally in the UK, a 6.1% increase following last year’s comparable 8.1% rise. However, system sales roles 11.7% to £147.6m, against £132.3m in FY2012.

The pizza company revealed that ecommerce — online and mobile — sales now account for 63.3% of first-half deliveries in the UK, compared to 52.4% in FY2012, with further rises expected with a new version of its website due in the second half of the year.

Internationally, system sales rose in the Republic of Ireland and Switzerland by 5.1% and 6.2% respectively. But it’s the German sector that disappointed the market this morning — losses are anticipated to be £2m-£3m more than previously expected, due to Domino’s corporate stores significantly lagging the performance of its franchise stores in the country.

As a result, the company plans to transition the majority of its corporate stores across to franchisee management as soon as possible, which will incur additional one-off costs. Chief executive officer Lance Batchelor commented:

“Corporate stores have allowed us to test menus, develop marketing plans and understand the German consumer – but now that the ground work is done, it is time to drive our German expansion using our tried and tested franchise model.

“We know the best way to get great results from stores is to put them in the hands of franchisees – and with five world-class franchisees now operating stores in the German market and more arriving shortly, we are excited about the future in this fledgling territory.”

Even with today’s top-slicing, Domino’s shares have jumped more than 25-fold since their 2002 low — and history dictates they could rebound once more. If you are keen to earn such handsome profits from shares, this free Motley Fool report — “10 Steps To Making A Million In The Market“ — can help you on your way.

The report explains how tracking down small, dynamic companies is a vital step on the path to the magic million milestone. You never know, the next Domino’s Pizza could be out there right now ready to transform your wealth! Click here to get it completely free.

> Sam does not own shares in Domino’s Pizza.