UPDATE 1-UK's Domino's has strong start to 2014, Germany troubles persist
LONDON Feb 27 (Reuters) - Domino's Pizza said a spike in orders from customers staying in to escape Britain's wet weather was behind a 14.6 percent jump in sales in 2014, although the strong start was tempered by setbacks to its expansion into Germany.
Domino's, the UK's biggest pizza delivery firm with nearly 800 stores, has grown rapidly via promotions and online sales and has expanded into Ireland, Switzerland and Germany. But in Germany, where it has 23 stores, roll-out plans have been hit by weak trading and higher-than-expected labour costs.
The company on Thursday reported a 1.9 percent rise in pretax profit for 2013 to 47.6 million pounds ($79.2 million) in line with market expectations.
But it booked pre-tax exceptional costs of 27.5 million pounds for the year, of which 26.5 million related to impairments and other exceptional charges in its German business, which made a loss of 7 million pounds.
Domino's expects losses in Germany in 2014 would be lower than in 2013, but ahead of previous guidance of 4 million. The firm has slowed German expansion while it gets to grips with store formats, overheads and growing sales.
It has not yet completed plans to transfer poorly-trading own-managed stores there to franchisees but hopes to do so during the first half of 2014 - a move Domino's hopes will boost sales.
"Whilst today's results are broadly as anticipated, and bolstered by a stellar start to 2014, higher German losses is difficult to ignore," N+1 Singer analyst Sahill Shan said, adding he expected to reduce 2014 full-year pretax profit expectations by 5 to 7 percent.
Shares in Domino's were up 0.7 percent to 560 pence at 1000 GMT.
The company is still looking for a new chief executive after Lance Batchelor surprised investors in December with a decision to join travel and insurance group Saga. Interim boss David Wild said Domino's hoped to have a final shortlist of potential replacements in the coming weeks.
Domino's, which sold 65.5 million pizzas in 2013, added it expected to open 40 to 50 new stores in the UK in 2014, having opened 50 in 2013. Five new stores will open in Germany.