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Domino's sales rise but profits fall

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Pizza maker Domino's has recorded strong sales figures for the six months to June 30th.

Interim results for the chain found that system sales increased by 13.8 per cent to £326.5 million for the half-year period - up from £286.9 million in 2012. It also recorded a strong operating margin of 21.2 per cent - this excludes Germany and Switzerland. 

Despite this, overall group profits fell by 46 per cent to £11.6 million. The main reason cited by the company is the investment made in the German business, where it acquired the right to own, operate and franchise the brand in 2011. Slower-than-expected growth in this country has hampered the organisation's progress. 

Chairman Stephen Hemsley said: "Germany is a true start up, in one of the most exciting markets in Europe. It will take time to reach scale there, to build enough brand awareness and open sufficient stores to cover our fixed costs.

"It is important to remember that Domino's businesses around the world have taken some time to reach critical mass, before going on to be real profit generators."

There are still plenty of positives for Domino's though, as it has posted strong like-for-like sales across Europe, including the UK (up by 6.4 per cent), the Republic of Ireland (up by 6.5 per cent), Germany (up by 23.8 per cent) and Switzerland (up by 7.8 per cent).

Chief executive officer Lance Batchelor said he is pleased with the results, especially the promising figures relating to the UK and Ireland. He added the company's franchise system leads the way in the leisure sector and it is starting to get more business online. 

Talking about the German expansion, Mr Batchelor is confident of success as corporate stores have been able to test menus, develop marketing plans and develop an understand of consumers in the country.ADNFCR-16001031-ID-801619062-ADNFCR

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