Domino’s FY26 revenue falls 11%, same-store sales drop 4.1%, impairments weigh

Statutory Loss Masks Underlying Profit Growth

Domino’s Pizza Enterprises Limited (ASX:DMP) posted a statutory loss of AUD 134.2 million for the financial year ended 28 June 2026, a dramatic swing driven by significant non-cash impairments and write-downs. These charges, totaling AUD 255.7 million after tax, related primarily to underperforming assets in France and Taiwan, technology projects no longer aligned with the Group’s strategy, and corporate store closures.

Despite the headline loss, Domino’s underlying net profit after tax rose 4.0% to AUD 121.6 million, in line with prior guidance. Revenue declined 11.2% to AUD 2.046 billion, with same-store sales falling 4.1%, reflecting a deliberate reset away from discount-driven volume towards more sustainable, profitable sales.

Network Reset and Franchisee Profitability Focus

The company is undertaking a substantial network optimisation, with plans to close up to 60 stores across Europe, Australia, New Zealand and Asia. These closures target underperforming locations to improve the overall health and profitability of the franchise network, expected to deliver approximately AUD 11 million in annualised EBIT benefits.

Franchisee profitability improved notably, with average franchisee EBITDA increasing 11.3% on a constant currency basis to AUD 105,700 per store for the rolling 12 months to the third quarter of FY26. This is the highest level in four years, though still short of the company’s AUD 130,000 target.

A successful pricing and operating model trial in Western Australia boosted average store EBITDA by over 30% despite lower sales and order volumes. Domino’s plans to progressively roll out this model across Australia in FY27, balancing margins and customer volumes carefully.

Leadership Changes and Cost Reductions

Significant leadership changes marked the year. Andrew Gregory, a seasoned quick service restaurant executive with over 30 years’ experience including senior roles at McDonald’s, was appointed Group CEO and Managing Director in August 2026. George Saoud served as Group CFO and COO during the transition, receiving a one-off AUD 1 million discretionary award for expanded responsibilities.

Domino’s delivered AUD 67 million in annualised cost reductions through headcount cuts, IT savings, and supplier input cost reductions. Net debt was reduced by AUD 227.8 million, lowering net leverage from 2.57 times to 1.86 times following a AUD 1.05 billion refinancing with improved pricing and staggered maturities.

Dividend Declared with DRP at Discount

The Board declared a final unfranked dividend of 32.5 cents per share, payable 30 November 2026, following an interim dividend of 25 cents. The dividend reinvestment plan (DRP) will apply to FY26 dividends with shares issued at a 1% discount to the 10-day volume weighted average price commencing 7 September 2026.

Climate and Regulatory Risks Disclosed

Domino’s included comprehensive climate-related disclosures aligned with the mandatory Australian Sustainability Reporting Standard AASB S2. The company identified physical risks such as supply chain disruptions from extreme weather and transition risks related to decarbonisation pressures on franchisee profitability. While these risks are anticipated to have more material impact over the medium to long term, Domino’s is taking early steps in governance, scenario analysis, and supply chain resilience.

Legal proceedings remain an overhang. The company is appealing a Federal Court judgment ordering payment of $11,869 to the lead plaintiff in a class action concerning historical employee pay, with wider claims unquantified and pending further hearings. The financial impact of ongoing litigation remains uncertain.

What to Watch Next

Domino’s FY27 will test whether the reset strategy can translate into sales growth while preserving improved margins and franchisee economics. The rollout of the Western Australia pricing model across Australia is a key operational catalyst. Investors will also watch for developments in the legal proceedings and how the company navigates climate-related transition risks amid evolving regulatory landscapes.

With a refreshed leadership team and a sharper focus on franchisee profitability, Domino’s is positioning for a disciplined turnaround, but execution risks remain amid competitive and economic headwinds.