Domino’s Pizza of Britain (DOM.L) reported an increase of 16% in its pretax profits for the first quarter on Tuesday, due to the rise in costs and inflation in food prices, and announced that it will increase its marketing budget for the second quarter in an effort to attract more customers.
The shares of the midcap company which have fallen by more than 30% of their value in the first quarter of this year The shares were 1.9 percentage lower as of 0953 GMT and were below the overall index.
Exporters of Grain
The war that has erupted between Russia and Ukraine two of the largest exporters of grain, has pushed higher prices for wheat across the globe and raised concerns about the availability of flour.
Prices for energy have also increased which has knock-on effects for inflation throughout the economy.
The Chief Executive Dominic Paul said the company was more prepared than other companies to deal with the increase in costs due to its strong supply chain.
Despite the drop in profit, it raised its dividend by 3.2 pence , up from 3 pence last year . The company also launched the 20 million-pound ($24.43 million) buyback program for shares.
The British Domino’s Pizza Group is a franchisee of U.S.-listed Domino’s Pizza Inc and operates outlets within both the United Kingdom and Ireland.
The decline in the underlying income before taxes of 50.9 millions pounds during the initial six months mirrors the problems of Domino’s Pizza Inc (DPZ.N), that missed market estimates for its quarterly profits in the last week because of higher costs.
The company listed on the London Stock Exchange said its the profitability of its business would be weighed to the second half of the year as it transfers the cost to franchisees it own and helps it keep its outlook for the year.
Since pubs and restaurants have reopened following the lockdowns caused by pandemic and consumers have reduced their spending on food.
The British chain Domino’s has said that it has risen in market share and its partnership with delivery company Just Eat is being extended to almost 1/3 of its retail estate.
“We will increase our advertising budget in the second half of the game compared to the first and will be promoting our value proposition to our customers as we move into major events like the men’s soccer World Cup,” said Paul who will be leaving the team later in the year.