The Domino's Pizza Enterprises Ltd (ASX: DMP) share price rose 11.6% on Thursday to an intra-day high of $21.44.
That was a four-month high for the beleaguered ASX 200 consumer discretionary share.
The strong gain follows a trading update delivered at the company's annual general meeting (AGM) yesterday.
The AGM presentation was released shortly before the market close on Wednesday, so the impact wasn't seen on the shares until today.
Let's find out what was said.
Image source: Getty Images
Domino's Pizza shares fly on Thursday
Domino's Pizza shares finished the session 11.65% higher at $21.46 on Thursday.
This made Domino's the second fastest riser within the S&P/ASX 200 Index (ASX: XJO) today, behind lithium miner IGO Ltd (ASX: IGO).
At the AGM, the company told investors it was "resetting for profitable growth" and outlined a number of changes enacted since July, when Jack Cowin took the reins as Executive Chair following the resignation of CEO Mark van Dyck, who quit after just eight months in the job.
The company revealed group same-store sales growth (SSSg) of 1.2% during the first 17 weeks of FY26.
In Australia/New Zealand (ANZ), the company said orders were lower due to a 7% reduction in marketing expenditure and fewer promotions.
However, average order size and store margins improved.
This led to "materially higher" franchisee earnings before interest, taxes, depreciation, and amortisation (EBITDA) versus the prior corresponding period.
Cowin commented that the recent Halloween Friday promotion had led to the biggest day in the company's history in ANZ.
In Europe, Domino's Pizza said Germany had a record network sales week, and average order sizes were increasing on stable volumes.
France delivered negative SSSg in 1Q FY26, with new senior management focused on strengthening alignment with franchisees.
In Asia, Malaysia continued double-digit growth while Japan had negative SSSg due to lower discounting and media spending.
Cowin said of Asia:
Total sales are slightly lower, but the quality of those sales is improving — and that's the key to rebuilding long-term, sustainable growth.
Looking ahead
In a speech, Cowin told Domino's Pizza investors that they had "reset the business on a stronger foundation".
Debt has been refinanced, cost savings are being actioned, franchisee profitability is improving, and new leadership across the global business is now in place, save for a new group CEO and Australia CEO.
Cowin said:
We are generating solid cash flow, investing where it counts, and rebuilding momentum in our core markets.
Disciplined execution, growing cash flows, and proven leadership are driving our next phase of value creation.
Cowin emphasised a few key takeaways (pun intended) for Domino's Pizza shareholders.
He said SSSg was a key industry measurement, but largely irrelevant in the short term because their customer offering was changing significantly from a discount voucher-driven business to an everyday value pricing strategy that would deliver higher margins.
The most recent sales result of -1.2% is good considering the change in the business strategy and direction with a focus on profitability not sales volume.
Secondly, Cowin thinks the management team assembled over the past few months is "the most experienced management team in the food service business". He added that the search for a new Group CEO and Australia CEO are "well advanced".
Cowin emphasised that franchisee profitability was now the primary objective to increase company profits through better value pricing.
A 70 cent increase per pizza sold in Australia will raise franchisee profits from about $120,000 to $150,000 per unit.
The plan is that enhanced profitability will lead to an expansion of new units in various markets. This is already underway in Germany and Malaysia.
We have embarked on a mission of reducing cost and overheads significantly in the business which will enable us to reduce franchise support and increase DPE profit.
Under debt refinancing arrangements announced last week, Cowin expects free cash flow in excess of $100 million per annum.
He said the company's previous focus on expansion and new markets has now been replaced by cost control and efficiency.
The company has identified $60 to $70 million in potential cost reductions, with $50 million in costs already being actioned.
Cowin said:
Roughly two-thirds of those savings are being reinvested directly into our franchise partners, through lower food costs and greater marketing reach.
That means more working media, more customers seeing our advertising, and better value for franchisees.
FY26 guidance
Cowin said he was confident that the company would exceed the consensus full-year NPAT forecast (Visible Alpha) for FY26.
This would represent a modest increase compared with FY25.
We believe that a business with a profit driven strategy has a much higher chance of future growth than the heavy discount offers of the past three years and create a higher value stock through increased earnings.
Cowin said the company had provided $60 to $70 million to existing franchisees to support them until their profitability increases.
So as franchisees become more profitable, our shareholders share in the benefit of reduced support and increased earnings.
Investors back Cowin to continue driving change
Domino's Pizza shares investors gave Cowin resounding support at the AGM, with 95% voting in favour of his re-election to the board.
Cowin is Domino's Pizza's largest shareholder and the founder of Hungry Jack's.
Domino's Pizza shares snapshot
The Domino's Pizza share price slumped to a 12-year low of $13.11 on 2 October.
The ASX 200 consumer discretionary stock is down 29% over the past 12 months, but up 47% over the past month.
