Global Brands arrived on AIM last September (at 185p) with ambitious plans to expand its Domino’s Pizza master franchise in Switzerland, Luxemburg and Lichtenstein. Still at a very early stage in the building of the empire, GB has opened two new stores since then and released interim results containing a small pre-tax profit. The shares, however, have lost 28% to 133.5p.

The nine stores currently operated are all wholly owned by the company (not franchises). All are profitable, with GB expecting new stores to break-even after six months. By the end of this year seven more should have opened, precipitating the launch of the franchising campaign. This is a common franchising strategy. As CEO Dov Lachovitz says: ‘once the market is fully developed and we have a presence in all the big cities, then we’ll begin franchising.’

Lachovitz foresees the opening of seven new franchises a year in 2007 and the next, with a total of around 30 traditional Domino’s stores planned in Switzerland, with an additional number of smaller, ‘non-traditional’ outlets to deal mostly in takeaways instead of delivery.

The Swiss are not neutral when it comes to pizza and home delivery is the fastest growing sector in consumer foodservice in the country. Happily, according to Lachovitz, ‘the level of competition is really low’, with most being smaller operators. And in order to help tickle local fancies, informs Lachovitz, ‘we use Swiss cheese ‘.

House broker Hichens Harrison forecasts 2005’s full year sales of £3.5m will rise to £6.4m in 2006, bringing EPS of 5.2p. This does not take account of the potential impact of any more store openings from the seven at the time, which would near double and then triple the size of the current business in two years. Patient investors should think about taking a slice.

Global Brands	AIM	£1.45m	30.00p	0.00p
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