Investors ditch Domino’s shares as pizza sales cool
STRONG third- quarter figures from Domino’s Pizza did nothing to whet investors’ appetites.
Shares slipped after the business reported that UK sales jumped 10.5pc to £220.9m in the 13 weeks to September 25. Sales in the year so far are up 14.7pc to £684.9m in the UK with other regions trading well too.
Yet while the results appeared strong, experts said shares slipped because investors have become used to stellar levels of growth from the business. This might now be easing off.
Domino’s has increased its estimates for the number of UK stores it will open this year from 70 to 80, with 51 opened so far. It said the introduction of its Italiano range was helping the brand to reach new customers.
Credit Suisse said the update illustrated the health of the business and the continued franchise expansion suggested there were no undue concerns about the new national living wage, Brexit or food cost inflation.
Domino’s said it was facing tough comparative figures, but the board said it was confident that full-year results would be in line with mar- ket expectations. The firm this week appointed Rachel Osborne as executive director and chief financial officer. The chartered accountant previously worked at Vodafone and John Lewis.
The greatest faller on the FTSE 350 for the day, Domino’s shares tumbled 5.2pc, or 19.2p to 353.5p.
The FTSE 100 dropped for a second day, losing ground as the pound made some headway against the dollar. The market closed 0.7pc, or 46.87 points lower at 7,024.01.
Property services firm Kier Group fell after announcing the disposal of its consultancy business.
Kier sold Mouchel Consulting to professional services company WSP Global for £75m in cash. Kier had acquired the consultancy in June last year as part of its purchase of the Mouchel Group. But this summer the firm said it was evaluating the strategic options for the business, including the possibility of offloading it.
Mouchel reported revenue of £125m in the year to June 30, with a pre-tax profit of £5m. Kier said it expects the sale to provide an immediate profit of around £40m, which will be used for future investment and to reduce debt.
There was mixed reaction to the move. Jefferies shaved 40p off its target price for the stock, cutting it to 1550p, but Numis upped its own by 93p to 1510p. Numis said the move would underpin the firm’s balance sheet and help to accelerate growth plans. Kier shares dipped 0.7pc, or 9p to 1349p. Luxury furniture retailer Walker
Greenbank said its fabric-printing factory was back to full production after a flood. The AIM-listed firm, whose brands including Anthology and Harlequin, said sales of printed fabrics were on an improving trend.
While the effects of the flood at Standfast & Barracks are evident in current trading, it said they would be mitigated by the firm’s insurance, which has reimbursed the group to the tune of £7.9m. Production at the factory is now also benefiting from new replacement printing machines.
But sales came in at £41.8m in the first six months of the year as a result of the issues, down 8.7pc on the same period a year ago. Adjusted pre-tax profit after insurance was up 2.7pc at £3.8m. Walker Greenbank said despite the problems in the first half, it was confident of delivering its pre-flood expectations for the full year.
It has also entered into a conditional agreement to buy UK fabrics designer Clarke & Clarke for an initial amount of £25m. N+1 Singer upped its rating on the stock to ‘buy’. Shares eased off 0.5pc, or 1p to 202.5p. Synairgen, a drug development firm focused on respiratory diseases, plunged on a clinical trial update. The business had developed a programme for a product known as AZD9412 and licensed it to AstraZeneca in June 2014. The product was to be given to asthma patients at the onset of common cold symptoms. Synairgen shares slumped 33.8pc, or 11.5p to 22.5p.