Domino’s Pizza shares (LON:DOM) are facing a challenging period, with its price dropping to a new 52-week low of 249.60p, briefly dipping below the critical 250p mark during trading.
This latest decline continues a worrying trend for investors, as the stock has significantly underperformed the FTSE 250 over the past year, shedding 20% of its value. The pizza delivery giant is grappling with falling earnings, strategic store closures, and sentiment that has seen DOM fall to multi year lows.
This downward spiral reflects deeper issues within the company, most notably a decline in profitability. The company’s 2024 net income was down over 21% year-on-year, raising concerns about its ability to maintain its competitive edge and deliver shareholder value.
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Technical analysis further confirms the bearish sentiment. The current share price is significantly below both the 50-day (261.46p) and 200-day (279.29p) moving averages, indicating sustained negative momentum and a lack of buying pressure. While the Relative Strength Index (RSI) of 37.74 suggests the stock is approaching oversold territory, this may only provide a temporary reprieve, as the underlying fundamental issues continue to weigh on investor confidence.
Adding to the uncertainty, Domino’s Pizza Enterprises announced in February 2025 plans to shutter 205 underperforming stores globally, including a significant number in Japan and Europe. While these closures are intended to streamline operations and reduce costs by an estimated $10 million to $12 million annually, they also signal a recognition of weaknesses in certain markets and a need for significant restructuring.
A seemingly positive move, the increase in dividend to 7.50 GBX per share in April 2025, was met with scepticism. While dividend increases are typically welcomed by markets, the timing, amidst financial challenges and store closures, raised questions about the sustainability of the payout.
Despite these challenges, some analysts remain optimistic. The company’s strong brand recognition, established delivery network, and potential for growth in emerging markets could provide a foundation for future recovery.
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