A RECENT advertising blitz is expected to have helped Domino’s Pizza in its crucial fourth quarter after a recent slowdown in sales growth. It is estimated that the fourth quarter accounts for a third of Domino’s annual sales.
The fast food delivery group, which updates on full year trading on Tuesday, recently worried the market when third-quarter sales showed growth slipping compared with the first half.
Domino’s has since upped the ante, with more products added to its menu such as twisted dough balls and stuffed crusts, as well as a sharp increase in advertising and marketing going into its all-important final quarter.
Numis analyst Douglas Jack said he believed the recent moves made by the group have boosted trade.
“We believe like-for-like sales are unlikely to decline due to fourth quarter advertising being up by around 90 per cent, extended trading and strong performances from new products,” he added.
Most analysts are expecting pre-tax profits to rise to around £46 million over the year, up from £43.6m in 2011.
Following a positive update by Next last Thursday, more retailers will report on their key trading Christmas period this week. Marks & Spencer will reveal whether its advertising push won over shoppers after the retailer ditched its usual roster of celebrities for a music-inspired campaign.
Featuring familiar hits such as Kool & The Gang’s Celebration and an exclusive Rod Stewart cover of Have Yourself A Merry Little Christmas, the adverts were a break from tradition for the retailer. The campaign won M&S acres of coverage, but experts remain unconvinced that its Christmas performance will have been enough to offset recent trading woes and a tough comparative period from the year before.
Costly mistakes in its womenswear ranges left the group nursing a 10 per cent drop in half-year profits and a sharp sales slide.
Most analysts believe general merchandise sales declines will have improved marginally over the third quarter, down 1.5 per cent on a like-for-like basis. Food sales growth is expected to have slipped to 0.5 per cent.
Panmure Gordon experts said that while M&S still had “bags of potential”, they were cautious about the group after it warned of volatile trading at the half-year results and amid signs of heavy discounting to shift stock.
Analysts have been worried that Debenhams’ sales before Christmas were too dependent on promotions, despite the firm’s shares almost doubling in the past year following better than expected trading.
Panmure Gordon stockbrokers said figures on Tuesday are expected to show a 1.5 per cent rise in like-for-like sales, offset by uncertainty over margins after reported discounts of up to 50 per cent in the peak trading week before Christmas.
Debenhams announced plans last year to open another 17 UK stores over the next five years in a move that will create 1,700 jobs and add more than £150m in sales.
Week ahead
Tuesday: Balfour Beatty, Domino’s, Debenhams.
Wednesday: Restaurant group, Sainsbury’s, Ted Baker.
Thursday: Goals Soccer Centres, M&S, Tesco.
Friday: Tullow Oil.