Domino’s Pizza Enterprises, the Australian arm of the global pizza chain, today announced it expects minimal or no store growth for the current financial year. The company decided to close 80 underperforming locations in Japan and 10 to 20 locations in France, as these outlets were leading to overall losses.
The decision comes after a period of aggressive expansion in Japan, with more than 400 new stores scheduled to be launched between fiscal years 2020 and 2023. This rapid growth has led to increased media costs and reduced advertising budgets, as well as the underdevelopment of many of these stores, leading to a strategic reevaluation of the store network.
The company said the closure is expected to have a favourable impact on profitability. Savings will be redirected towards marketing and advertising initiatives designed to enhance customer reach and increase order volumes in these markets, which have been identified as having a low order frequency.
Looking ahead, Domino’s Pizza Enterprises is optimistic about the recovery in Japan, forecasting a return to positive same-store sales in fiscal 2025, which began this month. Additionally, the company forecasts an overall growth rate of 3% to 4% for the group’s stores for fiscal 2026.
Despite the current stability, the company maintains a positive long-term outlook for its markets, particularly in potentially profitable markets such as Germany.
The food retailer, which had to withdraw its fiscal year 2024 outlook in early January after its first-half profit forecast came in lower than expected, is expected to release its full-year results in August. The revised outlook was necessitated by weaker-than-expected network sales in Asia and Europe.
Reuters contributed to this article.
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