Signs of a Turnaround Boosting this ASX 200 Share

Among the growth stocks that pay dividends, this company stands prominently.

Domino's Pizza Enterprises Limited (ASX: DMP)

Domino's Pizza Enterprises Limited (ASX: DMP) provided a trading update for the first half of FY25, reporting an expected underlying net profit before tax of $84-86 million, which is in line with the company’s guidance. A major part of the company’s ongoing strategy includes a comprehensive review to improve long-term performance. This includes closing 205 underperforming stores (172 in Japan) and accelerating refranchising to improve profitability. The closures will result in annualized savings of $15.5 million, although they come with one-off restructuring costs of approximately $97 million. Domino’s also reported a rise in net debt by $15 million to $705.1 million, largely due to foreign exchange translations, but remains well below its banking covenants.

The company is focusing on improving operational efficiency across its global markets. This involves simplifying its store network, optimizing its cost structure, and improving procurement, especially in areas like food, packaging, and technology. The company has identified $18.6 million in annualized savings so far from these initiatives. Additionally, Domino's is working on a growth strategy to create long-term value by refining its market approach and focusing on sustainable growth across its international portfolio. These steps are aimed at positioning Domino's for stronger profitability and better shareholder returns in the future.

In Japan, Domino’s is making strategic decisions to turn around the market. The company plans to close 172 stores in the country, many of which were opened during the COVID-19 pandemic but have struggled to achieve profitability in the post-pandemic environment. The closures will improve the efficiency of the business in Japan, boosting expected annual EBIT by $10-12 million. Domino's aims to refocus on profitable regions and refine its pricing and customer proposition to ensure better performance in the long term. While Japan remains a key growth market, Domino’s is adopting a more disciplined approach to its expansion in the country.

For H1 FY25, Domino’s reported mixed performance across regions. Same-store sales (SSS) in Europe were slightly negative, with Germany showing recovery and Benelux performing well, but France seeing a decline. In Asia, Japan struggled in the first half, though Christmas trading brought positive results. Other markets, such as Singapore, Taiwan, and Malaysia, showed strong growth. Domino’s also announced its intention to maintain a dividend of 55.5 cents per share, which will be fully underwritten under its Dividend Reinvestment Plan. The company is focusing on refining its cost-saving measures and strengthening its partnerships with franchisees to drive long-term growth.

Source: Company’s Report