Why Domino's shares just went off a cliff

Profits are up - but investors are ditching the pizza company

Why Domino's shares just went off a cliff

Domino's pizza Ireland / Facebook

Domino's Pizza Group has been the worst performing company on the FTSE All Share index in London today after it published its annual results for 2016.

The company's revenues booked a major 14% revenue boost - but its shares are down by more than 16%.

Domino's shares fall by 16.5% in London

Its UK growth has slowed - and investors are betting that this trend is set to continue. It's like for like sales in the UK were still 7.5% higher - which is strong growth but a lot less than the 11.7% recorded last year.

The company's UK sales grew by 3.9% in the first nine weeks of 2017 - that's down from 4.8% growth during the same period last year.

Domino's is set to faced increased competition from delivery apps which offer a broader variety of food - such as Just Eat and Deliveroo, who have experienced massive growth. Uber Eats is also muscling into the food delivery market.

Meanwhile, Ireland delivered 10% year-on-year growth (at local currency values) for the group.

Domino's Pizza Ireland / Facebook

Online and mobile account for 73% of its orders - the company served up a total of 89 million pizzas last year. These sales were up by 21%.

It hopes to open 80 new outlets in the UK in 2017 - creating 3,000 jobs.

The company has recommended a final dividend of 4.5p giving a total dividend of 8.0p, growing 16% year on year.

Commenting on the results, Chief Executive Officer David Wild, said: "2016 was another successful year for Domino’s Pizza Group and this performance is reflected in today’s financial results. The UK delivered strong year-on-year growth due to robust like-for-like sales and the opening of 81 new stores.

"This performance, combined with our tight control of costs, has generated a significant rise in profits and a dividend payment of 8.00p per share. Our cash conversion remains very strong and we have reinvested through International expansion and returned cash to shareholders through dividends and share buy-backs."