Shares in Domino’s Pizza fell hard after missing its own guidance for annual profit growth.
A short time ago, the shares were down 16% to $42.82 after dropping as much as 20% an wiping out $1 billion in market capital.
A year ago, the shares hit $80 each, mainly on the back of perception that the company was a form of a tech stock and as the company pushed into new markets in Europe via acquisitions.
The company was a market darling as investors followed regular announcements about using advances in technology for ordering and delivery, including pizzas from the sky via drones.
The company today posted a record full year underlying net profit after tax of $118.5 million, a 28.8% jump but below its own guidance of 32.5%, due in part to problems with operations in France.
EO Don Meij says the company achieved records but didn’t reach all targets.
“We significantly lifted sales, revenue, EBITDA and margins for the group, which demonstrates that we are leveraging our competitive advantages,” he says.
“I acknowledge our results, while strong, did not reach the guidance we set. This was largely due to the delay in rectifying some issues with our online platform in France, and the initial response in H2 to our value range offering in France, which did not meet our expectations — both have now been addressed.
“We set high standards and we did not reach those high standards. I am confident we have the right strategy, and structure, in place — this has delivered, and will continue to do so, increasing sales and improving profitability in what is a high-growth business.”
He says Domino’s is confident in its multi-region strategies. The 2018 guidance of if for growth of net profit after tax of about 20%.
Domino’s also updated the market on its investigation into underpayment of pizza workers by franchisees.
The Fair Work Ombudsman is investigating following a Fairfax Media report earlier this year.
Domino’s today revealed that it had already recovered hundreds of thousands of dollars in unpaid wages and superannuation from an audit of just 15 stores.