TIDMDOM
RNS Number : 7970H
Domino's Pizza Group PLC
27 March 2020
LEI: 213800Q6ZKHAOV48JL75
27 March 2020
Domino's Pizza Group Plc
Coronavirus (COVID-19): Update
Domino's Pizza Group Plc ("Domino's" or "the Group") is today
providing an update on trading, actions being taken as a result of
Covid-19 and its strong financing and liquidity position.
David Wild, CEO said ,
"We've been working closely with the wider industry and
Government, and are keen to do all we can to support our customers
and communities by safely delivering hot food to help people stay
at home during this difficult time. The safety of our colleagues
and customers is always our top priority, so we've strengthened our
already high hygiene standards, rolled out contact free delivery
and switched to delivery only to ensure we can confidently serve
the public. We are also looking to recruit additional store
colleagues and delivery drivers.
"I'd like to say a big thank you to all our colleagues and
franchisee partners who are working incredibly hard to keep
Domino's delivering. Domino's is at its heart a delivered food
business, and we're working around the clock to keep our supply
chain operational, our back-office colleagues working from home,
and our stores making great tasting pizzas for our customers."
Background
In light of the outbreak of the Covid-19 pandemic and its impact
on the global economy and the food delivery sector, our focus in
recent weeks has been on ensuring the safety of our franchisees,
employees and customers, together with the continuity of our
stores, our deliveries and supply chain operations. We continue to
review this rapidly changing situation on a daily basis and are
engaging in evolving Government policy discussions. We are in
regular dialogue with the wider Domino's system to share learnings
and best practice. We are keen to do all we can to help our
communities and continue to be the leader in safe food delivery in
the countries in which we operate.
UK & Ireland
In our core UK & Ireland business, trading in January,
February and the first two weeks of March was in line with our
expectations. UK LFL sales ex splits growth over this period was
broadly similar to the run rate seen in Q4, at just over 3%, driven
by order count. Over the past week, UK trading has accelerated,
with the growth in delivery more than offsetting the lack of
collection sales. This LFL sales growth has been driven by growth
in items per order and therefore higher overall ticket, arising
from both the shift from collection to delivery as well as a change
in consumer purchasing behaviour.
We have taken a number of actions in our core UK & Ireland
business:
-- We have moved to entirely Contact Free Delivery, adding
additional peace of mind for our customers and colleagues. At the
start of this week, we also took the decision to stop in-store
collection orders, to further protect colleagues and customers.
Collection typically accounts for around 20% of sales, however so
far we have seen the growth in delivery more than offsetting the
lack of collection sales.
-- Ensuring our supply chain remains operational and with a good
level of service to stores. We have rolled out a number of measures
to protect our supply chain centres, our distribution network and
our supply chain centre colleagues. We have seen minimal disruption
to date. We are working closely with our suppliers to ensure flow
of food and other goods and are currently seeing a good level of
service.
-- Ensuring the safety of our customers and colleagues. We
operate at the highest level of hygiene standards across both our
supply chain operations and in our stores. We are working closely
with our franchisee partners to ensure store operations continue
and store colleagues are working in a safe environment. We are
recruiting additional delivery drivers to ensure we can meet higher
demand levels and provide employment opportunities during this
period of uncertainty. Our delivery drivers, store colleagues and
supply chain colleagues are categorised as key workers.
The announced business rates freeze and the VAT payments
deferral will benefit our franchisee partners and our corporate
store network. The Board are assessing other measures to support
franchisees as required.
Directly operated international businesses (classified as
discontinued)
In Norway, Switzerland and Iceland, we have seen significant
disruption, with sales down double-digit year on year and around 16
temporary store closures across the three markets due to labour
shortages and low demand. Our Swedish business is less affected at
present, but we continue to monitor the evolving situation in this
market closely.
Financing and liquidity
As reported at our full year results on 5 March 2020, as at 29
December 2019, our borrowing and financing position were as
follows:
Net Debt and covenants
At 29 December 2019, our net debt was GBP232.6m, made up of
drawn debt under our revolving credit facility ("RCF") of
GBP250.4m, other loans of GBP0.5m, offset with cash of GBP16.0m and
capitalised arrangement fees of GBP2.3m. Our net debt to EBITDA
ratio was 2.28x on a reported basis, and 2.31x on a covenant basis,
compared with our covenant limit of 3.0x. Our fixed charge cover
interest cover was 8.2x on a reported basis and 7.8x on a covenant
basis, compared with our covenant limit being greater than or equal
to 1.5x. Our current net debt position is slightly lower than the
reported year end position.
Facilities and financing
At 29 December 2019, we had GBP350m of committed facilities in
place under our RCF and overdraft, providing headroom of GBP99.6m
above our net borrowings of GBP250.4m. The RCF facility runs to
December 2023 and since the year-end has been drawn in full to
provide the group with liquidity if required.
We have a good relationship and open dialogue with our lending
banks, which, if necessary, will enable discussions to seek
adequate liquidity to support our business and, if needed, the
liquidity of our franchisee partners.
Dividend
The Board has already overseen actions taken on costs and
capital spending and continues to carefully assess all remaining
essential spending in order to protect our liquidity. Although our
performance and liquidity position remain strong, given the
volatility of delivery sales and with an uncertain outlook, we are
taking a cautious and prudent approach and therefore the Board has
decided to suspend the final dividend payment of 5.56p that was
announced as part of our full year results on 5 March 2020. The
Board will keep this matter under review in the coming months.
Annual General Meeting
In light of the ongoing and evolving coronavirus crisis, the
Board has decided to delay convening the 2020 Annual General
Meeting. Details of the revised date and arrangements for the
Annual General Meeting will be provided as soon as possible taking
account of government guidance.
Outlook
At the current time, and in light of a rapidly changing market
and global macro-economic situation, we are unable to provide
guidance for the remainder of the current financial year.
We have put in place a set of measures to continue to serve
customers and our communities, tightly manage the business and
navigate our way through these uncertain times. We will continue to
monitor external events and manage the situation closely. This
statement replaces our planned Q1 statement, however we will keep
the market updated on developments as appropriate.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulations (EU) No. 596/2014
("MAR") and is disclosed in accordance with Domino's obligations
under Article 17 of MAR.
The person responsible for making this notification is Adrian
Bushnell, Company Secretary.
For further information, please contact:
Domino's Pizza Group plc:
Bethany Barnes, Head of Investor Relations
07387 015695
Brunswick:
Tim Danaher, Samantha Chiene
020 7404 5959
About Domino's Pizza Group
Domino's Pizza Group plc is the UK's leading pizza brand and a
major player in the Irish market. We hold the master franchise
agreement to own, operate and franchise Domino's stores in the UK,
the Republic of Ireland, Switzerland and Liechtenstein. In
addition, we have a controlling stake in the holders of the
Domino's master franchise agreements in Iceland, Norway and Sweden,
as well as associate investments in Germany and Luxembourg.
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contact rns@lseg.com or visit www.rns.com.
END
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