UK's Domino's makes strong start to 2014 as profit edges higher

LONDON Thu Feb 27, 2014 2:26am EST

LONDON Feb 27 (Reuters) - Britain's biggest pizza delivery company, Domino's Pizza, said it had made a strong start to 2014 as it posted an expected small rise in annual profit.

The company, which has almost 800 UK stores and much smaller operations in Germany, Switzerland and Ireland, on Thursday said 2013 pretax profit rose 1.9 percent to 47.6 million pounds ($79.2 million), as higher losses in its fledgling German arm offset gains in its home market.

Sales rose 14 percent to 668.8 million pounds, with like-for-like sales growth of 7.0 percent in 670 UK mature stores.

Domino's expansion woes in Germany, which relate to higher than expected labour costs that have forced back its break even target to 2017, contributed to a rocky second half of 2013, when the group was also hit by surprise news its finance chief Lee Ginsberg and chief executive Lance Batchelor were both quitting.

Domino's booked pre-tax exceptional costs of 27.5 million pounds of which 26.5 million related to impairments and other exceptional charges within the German business.

The group said on Thursday sales momentum had continued, rising 14.6 percent at its UK stores open over a year in the first seven weeks of its new fiscal year.

Last month Domino's named former Halfords boss David Wild as its interim chief executive following Batchelor's decision to leave for travel and insurance group Saga in March.

Shares in the firm, a master franchisee of U.S. group Domino's Pizza Inc, closed at 556.5 pence on Wednesday, up 7 percent over the last year and valuing the business at 916 million pounds. ($1 = 0.6011 British pounds)