After eight quarters of sluggish growth, Jubilant FoodWorks, which runs Domino's Pizza and Dunkin' Donuts stores in India, has reported its highest same-store sales growth (SSG) at 6.5 per cent for the three months ended June 30. The growth, sector analysts said, hinted at a revival in sales at the company.
Led by new chief executive officer (CEO) Pratik Pota, Jubilant had focused on driving profitable growth over the past few months, said Abneesh Roy, senior vice-president, institutional equities, Edelweiss.
The company, Roy said, had not shied away from closing unprofitable stores. In the June quarter, for instance, it downed shutters of five Domino's Pizza and 13 Dunkin' Donuts outlets.
The number of store additions, on the other hand, was 13 for Domino's and only one for Dunkin' Donuts in the June quarter, bringing total store count to 1,125 for Domino's and 55 for Dunkin' Donuts at the end of the period.
Pota, who took over as CEO of the company from Ajay Kaul in April, said, "Our focus on delivering better value for money and driving innovation has helped bring back strong growth in Domino's Pizza.
We have also made significant progress towards reducing losses and building a sustainable business in Dunkin' Donuts. Additionally, our discipline of controlling costs and driving efficiencies has helped improve overall operating margins."
In a conference call with analysts on Monday, Pota said the company's SSG was aided by its everyday value offer at Domino's outlets. "This has increased the frequency of existing customers and attracted new consumers," he said.
The company also launched three new products at Domino's to build excitement among consumers, Pota said.
The company's earnings before interest, tax, depreciation and amortisation (operating profit) increased 37.8 per cent year-on-year, while operating margins improved 224 basis points year-on-year for the June quarter. While profit-after-tax (PAT) reflected an adverse impact of Rs 9 crore on account of closure of stores, PAT margins, said analysts, improved by 39 basis points for the period under review. Pota said his firm was maintaining store guidance of 40-50 new Domino's stores in 2017-18.
While this is lower than the aggressive store roll-outs by the firm in previous years, analysts say a slowdown in store additions is a result of its high base.