Domino's Pizza Enterprises, the Australian arm of the global pizza chain, said today it expects little or no growth for the current financial year. The company has decided to close up to 80 underperforming outlets in Japan and 10 to 20 in France, which are contributing to overall losses.
The decision comes after a period of strong expansion in Japan, with more than 400 new stores in fiscal years 2020 to 2023. This rapid growth has left some of these stores behind, along with rising media costs and declining advertising budgets.
The company said the closure is expected to have a positive impact on its bottom line. The savings will be used for marketing and advertising initiatives to expand customer reach and increase order volumes in these markets, which have been identified as having low order frequency.
Looking ahead, Domino's Pizza Enterprises is optimistic about a recovery in Japan and expects to return to positive same-store sales in fiscal 2025, which began this month. Additionally, the company expects total store growth of 3% to 4% for fiscal 2026.
Despite the current slowdown, the company maintains a positive long-term outlook for its markets, especially in potentially profitable markets such as Germany.
The food retailer, which was forced to withdraw its guidance for fiscal 2024 earlier in January after its first-half earnings forecast fell short of expectations, is due to report its full-year results in August. The revised forecast was prompted by lower-than-expected network sales in Asia and Europe.
Reuters contributed to this article.
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