Earnings round-up: Domino’s, Lovisa, Noni B and others report half-year results

From food to fashion, a number of retailers as well as the operator of Westfield, Scentre Group, released earnings reports. Here, we take a look at how the businesses are tracking, and what they expect from the months ahead.

Domino’s falls short of targets in ANZ, but Europe, Japan deliver growth

Quick service restaurant Domino’s Pizza Enterprises saw net profit after tax fall 9.2 per cent over the half year to 30 December 2018, reaching $53.3 million, while revenue increased 23.7 per cent to $702 million.

In Australia and New Zealand, the business grew market share in the pizza and fast food categories, and performed particularly well in New Zealand, though fell short of internal expectations and targets.

According to Domino’s group chief executive Don Meij, over 70 per cent of group revenue and over half of earnings before interest, tax, depreciation and amortisation came from Europe and Japan.

“With a population base in our current overseas markets more than 12 times Australia, our global business provides not only a significant runway for future growth, but also a natural hedge against short term conditions affecting any single country, or region,” Meij said in a note to investors.

Japan delivered a “standout performance”, with an EBITDA 34.3 per cent above the prior corresponding period underpinned by a strong trading performance.

While the performance of the business in France held back growth in Europe, the conversion of acquired Hallo Pizza stores in Germany “exceeded expectations”.

“Management is pleased with the performance in the half but we, like every Domino’s team member, look to improve our performance every day,” Meij said.

The first seven weeks of Domino’s second half saw same store sales increase 4 per cent and 13 new stores constructed and opened. EBIT for the period is expected to be at the lower end of the group’s guidance of between $227 million and $247 million.

Lovisa lifts profit, despite negative comp store sales

Jewellery and accessories retailer Lovisa reported a net profit after tax increase of 2.7 per cent to $25.5 million over the first six months of FY19.

Earnings per share increased 0.5 cents, to 24.2 cents per share. And despite challenging trading conditions pulling comparable store sales down 1.8 per cent, revenue increased 12.3 per cent to $133.2 million due to the rollout of new stores.

The brand said in a note to investors that major trends in the fashion jewellery space that have driven comparable store sales in past years were no longer present in the half.

Lovisa was particularly impacted by weaker trading conditions in Australia, which generally overperforms for the business, while strong sales in Malaysia offset the closure of 4 stores in Singapore.

The jewellery retailer said trading performance had picked up since the end of the half, with positive comparable store sales across all markets, though still below the target of between 3 and 5 per cent.

Lovisa is focusing on expanding its store network at a faster rater in the second half of FY19 than the first.

Scentre Group’s net profit down due to change in property value

Westfield operator Scentre Group’s funds from operations increased 3.9 per cent to $1.34 billion over the 2018 financial year, while net profit after tax fell 45.8 per cent to $2.28 billion – down from the $4.2 billion reported at the closure of FY17.

The lower NPAT figure was largely impacted by a lower property revaluation gains of $1.14 billion, compared to the $3.2 billion achieved at the end of FY17.

“Our results demonstrate the quality of our platform and the implementation of our strategy, which continues to generate long-term earnings growth and value for our shareholders,” Scentre Group chief executive Peter Allen said.

During the year, the property firm introduced 437 new brands, and 317 existing brands expanded their store network, with occupancy levels kept above 99 per cent.

Scentre also completed over $1 billion of developments, adding more than 106,000sqm to its portfolio. The firm now has total assets worth $39.1 billion, and assets under management of $54.2 billion.

For the 2019 financial year, Scentre is forecasting growth in funds from operations of approximately 3 per cent.

Noni B’s SFG acquisition drives sales, but restructuring costs dig into profit 

Fashion retailer Noni B has increased EBITDA by 31.4 per cent to $29.1 million for the half year to 30 December 2019, following the acquisition of five brands from Specialty Fashion Group.

However, $5.6 million in restructuring and transactional costs led to a net profit after tax of $9.5 million – a 19.2 per cent decline year over year. As a result, earnings per share fell 32.7 per cent to 9.9 cents per share.

“During this period, we have completed the majority of the integration required across the group,” Noni B group chief executive Scott Evans said.

“This has included consolidating supply chains, systems and reporting as well as establishing a single support centre so learnings can be shared and we can take advantage of the vast array of data we gather.”

The group continued to invest across its online presence, with sales through its online channels growing 27.9 per cent, and contributed 9 per cent of total sales – which grew 140 per cent to $464 million.

The group reaffirmed a forecasted EBITDA of $45 million for the full year, dependent on trading performance over the Mother’s Day period.

Looking toward FY20, and the synergies which are expected to have been reached in bringing the five new brands under the Noni B banner, the group expects an EBITDA of $75 million.

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