On Thursday, the stock price of Domino's Pizza Enterprises in Australia fell to its lowest level in over nine years. This occurred after the company decided to close low-sales stores in Japan and France, leading analysts to lower their profit expectations.
As of 0052 GMT, Domino's share price had dropped by as much as 9.6%, falling to AUD 32.62, the lowest level since February 2015, while the benchmark index remained largely unchanged.
Domino's stated after the close on Wednesday that store growth for this fiscal year is expected to remain flat or slightly increase. The company plans to close up to 80 low-sales stores in Japan and 10-20 stores in France.
Analysts at Macquarie believe that the company's strategy of focusing on improving store profitability is the right approach, but it may negatively impact market expectations in the short term.
Domino's Japan opened over 400 stores during fiscal years 2020 to 2023, resulting in many "immature stores."
Analysts at UBS stated: "Many stores in Japan are heavily loss-making, and the road to profitability is long, while the closure of stores in France reflects the challenges the company faces in the market as it realigns its operational focus."
The company expects same-store sales in Japan to return to growth by fiscal year 2025, and anticipates that store growth for the entire group will reach 3%-4% by fiscal year 2026.
Domino's said on Wednesday: "Given the fewer number of store openings during FY24 to FY26, the previously set 2033 target will not be achieved."
