Domino’s FY20 result (DMP)

Domino’s put out their FY20 results and it’s not a surprise to me that the shares reached an all-time high. Key callouts:

Success during COVID-19: Hardly a surprise, Domino’s has made a few tweaks to ensure success during this period (like contactless delivery) and scaled up their delivery team to meet demand.

Huge growth in the Japan business: Forecast growth has been revised up from 1000 stores to 1500 stores by 2032. Sales growth was 25.9%, the highest it’s been in years. What this suggests to me is that Domino’s has structurally changed the pizza market in Japan which has created new growth opportunity for them beyond what was originally forecast.

Domino’s store count is still expected to double in the next 5-10 years based on the current regions they occupy. Management are also pursuing acquisition opportunities which will create new engines for additional growth. Who’s to say the 3TEN model just applies to delivered Pizza?

Well-managed companies like Domino’s benefit from recessions because they can acquire distressed companies which aren’t as well-run and apply their business model to turn these businesses around. They operate in a diverse enough regional base (Japan and Western Europe) to know how to cater to local tastes, and I’m comfortably hanging onto my current holdings for the long term.

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