Which food stock to buy? – Domino’s or Retail Food Group

During H1FY17, Domino’s Pizza Enterprises Ltd (ASX: DPM) reported 9.4% yoy growth in Same Store Sales (SSS) revenue driven by business improvement across Australia, New Zealand, Belgium, France, Netherlands, Japan and Germany. Further, growth was led by increased customer counts due to the launch of Taste the Colour menu in Australia and New Zealand and improved technology across all markets.  Notably, 26.8% yoy growth in Network Sales to more than $1 billion ($1,166.1m) for the first time in the company’s history, driving a +21.1% increase in group revenue to $539.4m.  Domino’s ANZ network delivered again in H1 17, with +23.9% growth in underlying EBITDA to $55.2 million, with 17.2% growth in revenue to $150.1m. Trading results following the introduction of a Sunday surcharge to allow for higher wages for employees working on Sunday also aided the growth. The Sunday surcharge followed extensive testing of the new pricing model in multiple markets saw stable or increasing sales, prior to a national roll-out.  The company has upgraded both underlying EBITDA and NPAT guidance for FY17 to be in the region of +32.5% growth, following a +33.6% lift on the prior corresponding period (pcp) in underlying EBITDA to $116.2m, and a +30.8% increase (pcp) in NPAT to $59.7m.    

 

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