UK's Domino's shares rise on buyback, organic sales rise

By Karina Dsouza

(Reuters) - Domino's Pizza Inc's <DPZ.N> UK franchise Domino's Pizza Group <DOM.L> launched a 25 million pound share buyback on Thursday after posting a 6 percent rise in organic sales due to a rise in website and app orders.

Domino's shares rose as much as 8 percent after investors shrugged off comments that pointed to full-year pre-tax profit at the bottom of the company's previous guidance range.

Much like its parent company, Domino's UK franchise has been focusing on sales through online channels to fend off competition from app-based services like Just Eat <JE.L> and Deliveroo, which provide round-the-clock food delivery.

Online orders in Britain increased 11.4 percent in the quarter ended Sept. 30 compared to the previous year and accounted for 78.3 percent of all deliveries.

Domino's, which has been investing in order tracking technology for its delivery business, said the system was now live in 603 UK stores, leading to more efficient labour management and a better customer experience.

The company also said its international operations, spanning Switzerland, Iceland, Norway, Sweden and Germany, would break even for the full year.

"Our businesses continue to trade well, despite the evident uncertainty among UK consumers, and hot weather across Europe for much of the quarter," Chief Executive Officer David Wild said.

Domino's said it would start its new share buyback immediately.

The company bought back shares worth 36.6 million pounds in 2017 and said in March that it expects to buy back 50 million pounds worth in 2018, completing 21.1 million pounds of it in the first quarter. It has not disclosed any purchases since.

Domino's, which sells almost 90 million pizzas every year to customers around the UK, now expects pretax profit to be in the middle of a range of market expectations that it calculates as between 93 million and 99.6 million pounds.

That would point to profit close to the bottom of previous market estimates of between 95.9 million pounds and 101.4 million pounds, which the company said in August it would be in line with.

Shares of the company were up 5.3 percent at 274.4 pence at 0733 GMT.

(Reporting by Karina Dsouza and Arathy S Nair in Bengaluru; Editing by Amrutha Gayathri and Adrian Croft)