Domino’s Pizza Shares (LON:DOM) Plunge As Profit Narrows, Guidance Cut

Domino's Pizza shares (LON:DOM) are down 16% in London trading this morning, as a challenging H1 2025 report revealed a narrowing profit margin despite gains in market share.

The company's EBITDA fell 7.4% to £63.9 million, a figure that underscores the squeeze from inflation and shifting consumer habits, and leading Domino's to move full-year EBITDA guidance to be in the range of £130 million to £140 million, a notable decrease from previous forecasts.

Weaker consumer sentiment is also biting into Domino's top line. Total orders remained flat in H1 25, while like-for-like sales dipped 0.1%, with this worsening in the second quarter, down 0.7%. This softness suggests consumers are becoming more cautious with discretionary spending amid rising living costs.

Store expansion is also facing headwinds. Domino's opened only 11 new stores year-to-date, as franchisees adopt a more cautious approach given increased employment costs. FY25 new store openings are now expected to be in the mid-twenties, although the company maintains a healthy pipeline for 2026.

Despite the profit squeeze, Domino's is demonstrating resilience in a competitive market. The pizza giant has increased its market share, with its slice of the UK takeaway market rising 20 basis points to 7.2%. More impressively, Domino's now commands 53.7% of the UK pizza takeaway market, up a substantial 560 basis points.

“There's no getting away from the fact that the market has become tougher both for us and our franchisees, and that's meant that the positive performance across the first four months didn't continue into May and June,” stated Andrew Rennie, CEO, acknowledging the challenging conditions.

Domino's is actively exploring strategic opportunities, including the potential acquisition of a second brand however, the company is adhering to strict financial guardrails and has emphasized that no opportunities under current consideration would require equity issuance.

If no acquisition is announced by the end of 2025, the board expects to resume share buybacks, potentially offering a boost to the holders of the stock.

The near-term outlook for Domino's Pizza Group hinges on its ability to navigate the challenging macroeconomic environment and maintain its market share gains. The revised guidance reflects a more cautious outlook, and markets are clearly erring on the side of caution off the back of the print.

Domino's share price has now shed 33.4% over the past 12 months, effectively seeing the company lose one third of it's value and pulling market cap below £1B (£817M).