Domino’s share price lifts despite no dividend dough for new investors

Woman holding Domino's pizza up to her face and looking excited about the company's latest news

Woman holding Domino's pizza up to her face and looking excited about the company's latest news

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is currently in the green by 0.28% even though the food business has just gone ex-dividend.

With the share going ex-dividend, it means new investors won’t be entitled to the FY23 half-year interim dividend that was declared.

Domino’s dividend

The Domino’s board decided to cut the interim dividend by 21 cents per share to 67.4 cents per share, which represented a cut of 23.8%.

In percentage terms, the dividend was cut by more than earnings per share (EPS) declined – EPS fell 21.8% to 82.5 cents per share.

This came after a 4% decline in network sales, a 14.3% fall in earnings before interest, tax, depreciation and amortisation (EBITDA), and a 21.3% drop in earnings before interest and tax (EBIT).

Domino’s pointed out that there was a negative impact from foreign currency exchange headwinds and other one-off costs such as spending $5.4 million on class action legal defence costs.

However, while the Domino’s share price is up slightly today, it’s down 34% over the last month, and down 30% since the result was released.

Is the outlook improving?

In the first seven weeks of the second half of FY23, Domino’s reported 4.2% network sales growth, but that includes the benefit of the Malaysian and Singapore acquisitions. Same-store sales declined by 2.2%. The business had added another 15 stores.

The company is expecting that its same-store sales growth will be below its three to five-year target.

Domino’s is also suffering from the impacts of inflation. Higher delivery pricing (including service fees and higher bundles) reduced delivery customer acquisition and retention.

It also said that customer counts “have not met expectations since December, especially in Europe and Asia”, lowering its store profitability.

The company is working through its pricing strategies, with the business balancing its ‘value equation.’

In other words, there may not be a super-quick fix to the current situation.

Domino’s share price snapshot

Over the past year, the Domino’s share price has dropped around 37%.

The post Domino’s share price lifts despite no dividend dough for new investors appeared first on The Motley Fool Australia.

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More reading

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Domino’s Pizza Enterprises. The Motley Fool Australia has recommended Domino’s Pizza Enterprises. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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