By Matt Scuffham
Britain's biggest pizza delivery chain, Domino's Pizza UK & IRL, said on Monday it expected to beat full-year profit forecasts as it reaped the benefits of sponsoring TV phenomenon 'Britain's Got Talent'.
Shares in the company, which operates the UK and Ireland franchise of the global home delivery brand, were up 8.9 percent to 239 pence at 0840 GMT, having already risen by over 40 percent since the start of the year.
Domino's is in the second year of a three-year deal to sponsor Britain's Got Talent, the final of which was the most watched programme on British television this year with 19 million viewers tuning in to watch the likes of Scottish singing sensation, Susan Boyle.
"It (Britain's Got Talent) has been fantastic. The brand awareness and visibility one gets is tremendous. You'll get double-digit uplift in like-for-like sales (when the programme is on)," Chief Financial Officer Lee Ginsberg told Reuters.
The sponsorship has coincided with a period in which customers were already increasingly opting to order takeaways rather than eating out to save money during the recession.
"We trade very well in more difficult times because people trade down and stay at home more," Ginsberg said.
Ginsberg told Reuters he expected analysts to upgrade forecasts for 2009 underlying pretax profit to between 27 million pounds ($44.36 million) and 27.5 million pounds ($45.18 million). The range had previously been between 25.7 and 27 million pounds, with the consensus at 26.3 million, he said.
For 2010, Ginsberg said he anticipated forecasts rising to around 30 million pounds from about 28.5 million at present.
Domino's reported pretax profit before exceptional items of 13.6 million pounds ($22.18 million) in the 26 weeks to June 28, compared with 10.9 million in the same period the previous year. Like-for-like sales were up 7.1 percent.
FORECASTS RAISED
KBC Peel Hunt lifted its 2009 pretax profit forecast by 3 percent to 27 million pounds.
"This is a top of sector performance reflecting both the value appeal of staying at home and Domino's marketing excellence, typified by the sponsorship of the record-breaking 'Britain's Got Talent'," said KBC analyst Paul Hickman.
WH Ireland raised its 2009 pretax profit forecast to 26.4 million pounds from 25.7 million and its 2010 expectation to 31.1 million from 25.7 million.
"Domino's is well placed to benefit from the current economic environment with customers trading down from eating out. Also there remains much roll-out potential providing the long-term attraction," said WH Ireland analyst Keith Ashworth-Lord.
Domino's opened 23 new stores during the period, giving it a total of 576.
Ginsberg said it could exceed its target of 50 in the current year as it takes advantage of the tough economic conditions leading to an increase in the availability of suitable premises.
"The availability of sites is quite a bit easier in these economic times. There's every chance we're going to hit the 50 and with a good headwind maybe a few more," he said.
Rival Papa Johns said in June it plans to expand to 300 outlets in Britain and Ireland by 2013 from 135 at present.
