Companies: DOM   

Domino's Pizza UK & Ireland saw its average weekly unit sales hit an all-time high in the week before Christmas, while like-for-like sales in the final nine weeks of the year were ahead 22 per cent compared to 2000, writes Ben Cobley.

The pizza delivery franchisee put the storming performance down to a combination of factors, at the forefront of which was its national TV advertising campaign, which it finances through a dedicated National Advertising Fund. This was so successful in the first half of 2001 that investment in it was increased in the second half.

The redesigning of its pizza outlets, most of which are franchised to outside operators, also played a part in the success. The company said that sales were higher at every store that had been refurbished, and that this programme will continue.

However, the company's failure to meet new opening targets is slightly disappointing, with 24 new outlets opened during the period. In July, following the release of interim results, chief executive Stephen Hemsley said that he expected 'to murder' analysts' expectations of 26 openings for the year as a whole.

However, Peel Hunt analyst Paul Hickman is not particularly worried, as the site pipeline is strong, supporting a forecast of 30 openings in 2002. The longer term target remains to have 500 stores open by 2006, compared to the current 237.

Meanwhile, the latest news has led Hickman to upgrade his pre-tax profit forecast again, from £2.7 million to £2.8 million, with earnings of 3.8p. At 70p, up 1.5p on the day, this means that the shares are currently priced at 18.2 times prospective earnings.

Interim figures for the six months to 1 July showed pre-tax profits increased 15 per cent to £1.2 million, on turnover up 43 per cent to £20.8 million.