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Earnings

UK's Domino's Pizza profit slips as virus dents orders, adds costs

FILE PHOTO: Balloons are seen on the front of a newly opened Domino's Pizza franchise in London, Britain, early morning March 14, 2017. REUTERS/Russell Boyce

(Reuters) - Domino's Pizza Group Plc DOM.L posted a 2.7% dip in first-half operating earnings on Tuesday, hurt by a fall in overall orders and the additional costs of cooking and delivering its pizzas safely in the coronavirus outbreak.

Britain’s largest pizza delivery chain said underlying earnings before interest and taxes (EBIT) fell to 51.4 million pounds ($67.27 million) for the six months ended June 28, from 52.8 million pounds a year earlier.

A lockdown in the UK boosted the company as Britons ordered-in more, leading to a 23% rise in deliveries, but Domino’s had to re-think operations, rationalise its menu, close restaurants during restocking and implement contact-free, hygienic deliveries.

System sales, which measure the total sales of the group’s franchisee and corporate store systems, rose 5.5% in the UK and Ireland.

But the company, a franchise of U.S. based Domino's Pizza Inc DPZ.N, said total orders fell 5% as collection at its stores slumped by 44%, even as deliveries overall rose 12%.

Chief Executive Officer Dominic Paul also cautioned on the future.

“While trading in the first few weeks of the second half has been encouraging, it is too early to conclude on how consumer behaviour will evolve,” said Paul, who joined earlier this year as part of a management shake-up.

Domino’s also said its deferred 2019 dividend would be paid in September, while it reviewed a total payout for the current year.

Reporting by Pushkala Aripaka in Bengaluru; Editing by Rashmi Aich

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