Companies: DOM   

Rapidly-expanding brand franchisee Domino's revealed first half pre-tax profits up 15% to £1.2m for the six months to 1 July, but the underlying performance was much better, for in the first half of 2000 the company sold 'three or four' of its corporate-run stores to franchisee operators for a profit of £229,000. Without those transactions, operating profit, strictly up 27% to £1.33m, actually increased by 62%. Turnover increased 43% to £20.8m, while 'system sales', which are shared with the franchisees, were up 33% to £46.4m. Chief executive Stephen Hemsley says that the strong performance can be put down to a combination of the launch of its Heatwave pizza warming device during the fourth quarter of 2000, a TV advertising campaign to highlight it, and an improvement in ingredients that are now delivered fresh to each outlet three times a week. During the 26 weeks to 1 July, an extra 13 outlets were opened. Hemsley comments that 'the market expects us to open 26 stores over the current year, but I hope to murder that'. In the longer term the expectation is to have 500 stores open by 2006, compared to 228 now. Peel Hunt has increased its full year pre-tax profit forecast to £2.7m, putting Domino's on a prospective p/e of 16.8.