Investors have dumped Domino's Pizza shares after the fast food chain missed its full-year earnings and sales guidance and indicated slower sales in Australia in the new financial year.
Chief executive Don Meij blamed the weaker-than-expected earnings on soft customer demand in Europe at the end of June, due to an "abnormally hot summer" as well as promotion problems in Japan in December.
Excluding one-off charges totalling $14.5 million, relating to the European and Australian operations, underlying profit for the year ended July 1 rose 15 per cent to $136.2 million, missing the group's 20 per cent profit growth guidance.
Same-store sales - which excludes new store openings across the financial year - from its vast Australian and New Zealand operations were up 4.5 per cent, but below the revised guidance of 6 to 8 per cent growth.
Domino's local promotions failed to attract as many customers as expected, Mr Meij said.
"When we look at our promotions, we just, just missed the mark," he said on a media call.
Domino's shares slid as much as 13 per cent, before recovering some ground. By 1330 AEST, the stock was down $4.08, or 7.7 per cent, to $48.32 in a firm Australian share market.
IG market analyst Kyle Rodda attributed the share decline to lower-than-expected income figures.
"The actual numbers missed even the lowest analyst estimate, coming as quite a shock to the market," Mr Rodda told AAP.
European annual same-store sales rose 5.7 per cent, but also missed February's guidance range of 6-8 per cent growth, while Japan's same-store sales rose 0.9 per cent, in the middle of its zero to two per cent guidance.
The group said same store sales for Australia and New Zealand were slower for the first five weeks of the new year, at 3.9 per cent.
Domino's ANZ boss, Nick Knight, says their New Yorker and vegan cheese pizzas are proving popular with customers.
Europe same-store sales were also slower in the new year, while Japan had sharply lifted business to show same-store sales growth of 12 per cent.
Domino's statutory full-year net profit was 18 per cent higher at $121.5 million.
The chain opened 145 new stores and acquired 163 stores from other brands in 2017/18. It plans to add between 225 and 250 stores to its network this financial year.
Revenue rose 7.5 per cent to $1.15 billion, with same stores sales up 4.3 per cent.
The group expects same-store sales to be three to six per cent higher in 2018/19.
PROFIT JUMPS, MORE NEW STORES FLAGGED
*Net profit up 18pct to $121.5 million
*Revenue up 7.5pct to $1.15 billion
*Final dividend 49.7 cents, partially franked, up 4.8 cents from 44.9 cents
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