Domino's Pizza Enterprises Ltd (ASX: DMP) shares have had a year to forget in 2024.
Shares in the S&P/ASX 200 Index (ASX: XJO) fast-food pizza retailer are down 1.19% in afternoon trade today at $30.63.
As you can see in the chart below, that sees shares down a painful 48% year to date. Though that doesn't include the $1.06 a share in fully franked dividends eligible stockholders will have received in 2024.
Despite the big tumble, short sellers are still betting against Domino's shares. The pizza retailer kicked off the week as the tenth most shorted share on the ASX, with a short interest of 9.4%.
Fairmont Equities' Michael Gable counts among those investors who believe the stock could continue to struggle (courtesy of The Bull).
Here's why he has a sell rating on Domino's.
Time to sell Domino's shares?
The first reason Gable is bearish on Domino's shares over the short term is slumping sales and profits.
"Same-store sales in Japan and France were negative in the first 17 weeks of fiscal year 2025. Net profit after tax fell 1.9% in fiscal year 2024," he said.
Commenting on the decline in the company's Japanese and French same-store sales earlier this month, Domino's management said there was "more work required in these markets to deliver positive sales".
The second reason Gable is bearish on the stock is the departure of the company's long-standing CEO.
"The company's chief executive, Don Meij, has decided to step down after 22 years at the helm," Gable said.
Noting the big 2024 slump in the share price, Gable's third reason to sell Domino's shares is that the recent challenging conditions could continue into 2025.
"We expect the company to remain under pressure, at least in the short term, given a challenging outlook amid fierce competition," he said.
Why is the CEO leaving?
As Gable mentioned, on 5 November, Meij announced he was leaving his post after a lengthy stint at the helm. Domino's shares tumbled 6.3% on the day.
Mark van Dyck took over as CEO the following day, with Meij agreeing to stay on during a 12-month transition period.
Atop his 22 years as the top executive, Meij worked in various roles for the company for the preceding 18 years, totalling four decades with Domino's.
"When I started as a delivery driver in Redcliffe, Queensland, I never imagined I'd become CEO of a truly global company with more than $4 billion in sales," he said on announcing his exit.
