Domino’s Pizza Earnings: Greater Sales Momentum Needs More Marketing Spending

Narrow-moat Domino’s Pizza reported earnings that were broadly in line with our expectations. Fiscal 2024 underlying earnings per share of AUD 1.34 was in line with FactSet consensus and slightly below our AUD 1.35 estimate. However, the start to fiscal 2025 is underwhelming, and we have downgraded our forecast. The more muted near-term outlook reflects a likely more protracted earnings recovery in Japan and France. Here, Domino’s has about 40% of its stores—and declining profits offsett the otherwise solid performance in key countries like Australia and Germany. Compared with fiscal 2023, underlying net profit after tax declined by 2% to AUD 120 million. In the first seven weeks of fiscal 2025, global same-store sales declined 1%—below our and management’s expectations. This compares with growth of 3% in the previous corresponding period.