Jubilant FoodWorks Ltd., the operator of Domino's Pizza and Dunkin' Donuts, saw its second quarter profit decline, missing analysts' estimates, on the back of heightened local competition and weak demand.
Standalone net profit of the country's largest food service company fell 39.45% year-on-year to Rs 72.15 crore in the quarter ended September, according to an exchange filing. That compares with the Rs 87.9 crore consensus estimate of analysts tracked by Bloomberg.
Jubilant FoodWorks Q2 FY24 (Standalone figures, YoY)
Revenue rose 4.5% to Rs 1,344.83 crore (Bloomberg estimate: Rs 1,368.9 crore).
Operating profit fell 10.18% to Rs 280.7 crore (Bloomberg estimate: Rs 290.67 crore).
Margin at 20.87% vs 24.28% on higher expenses (Bloomberg estimate: 21.2%).
Total expenses rose 11% to Rs 1,255.43 crore.
Cost of raw materials rose 5.3% to Rs 303.82 crore.
“The growth continues to be order-led with elevated level of consumer engagement and the decline in ticket is also now arrested," said Sameer Khetarpal, chief executive officer and managing director at Jubilant FoodWorks.
Consumer engagement, according to the company's investor presentation, remains elevated with all-time high Domino's quarterly app downloads at 10.6 million, up by 17.8% over the previous year. The monthly active users of the app came in at 10.8 million.
The enrollment to the loyalty programme—Domino’s Cheesy Rewards—grew by 16% versus the prior quarter to 19.5 million, and the loyalty order contribution stood at 50% in the quarter.
Besides, a second consecutive quarter of sequential improvement in average daily sales of mature stores and gross margin are early indicators of structural improvement in the health of the business, Khetarpal said.
The average daily sales of 1,368 mature stores came in at Rs 81,658, up by 1.4% sequentially, according to the company.
Gross margin rose 15 basis points over the previous quarter and 38 basis points over the previous year to 76.4% in Q2 FY24.
During the quarter, the pizza operator saw a 1.3% drop in like-for-like sales over the previous year, marking the third consecutive quarter of decline as price conscious consumers are tightening their belts amid inflation. Domino's also launched cheaper pizzas to attract more consumers.
Domino's revenue from the delivery channel, which comprises 65.5% of sales, rose 7.9% year-on-year. Revenue in the dine-in segment, which accounts for 34.5% of sales, was lower by 3.8% over the previous year.
"The degrowth is because of decline in ticket and orders due to temporary closure of stores undergoing re-imaging," the company said. It re-imaged or renovated 33 Domino’s stores till the first half of the ongoing fiscal and is on track to re-image 100-plus Domino’s stores.
The company opened 60 stores during the quarter, taking the total count to 1,949 across all brands. It added 50 Domino's Pizza outlets, five Popeyes outlets, four Hong's Kitchen and one Dunkin' Donuts outlet.
Shares of Jubilant Foodworks rose 0.47% on the NSE before the results were declared, as compared with a 0.83% decline in the benchmark Nifty 50.
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