Domino’s Pizza unveils ‘exceptional’ trading, and ITV reports underwhelming viewing figures

“The FTSE 100 made a steady but unspectacular start to trading on Tuesday – likely a relief to investors who have seen some big gains and substantial losses in recent days as levels of panic over rising inflation have ebbed and flowed,” says AJ Bell Investment Director Russ Mould.

“Monday’s significant rally suggested that noises from central bankers aimed at calming fears about spiralling bond yields and rising prices had succeeded in giving investors the comfort blanket they needed to start buying again.

“Technology stocks remained under pressure as the US Nasdaq index entered so-called ‘correction’ territory, now down 10% from its February peak.

“Oil prices fell back below $70 per barrel after briefly rising above that level for the first time in more than 12 months due to attacks on Saudi facilities at the weekend. US stockpiles of oil, which have been affected by extreme weather in the last few weeks, will be closely watched later this week.”

Domino's Pizza

“We might not have been able to hit the bars, clubs and firework displays on New Year’s Eve but that didn’t stop people treating themselves to a small slice of luxury, judging by comments from Domino’s Pizza.

“News that trading around the New Year period was ‘exceptional’ would suggest that people stuck indoors under lockdown got their kicks through a takeaway.

“Its full-year results are full of punchy comments about earnings growth and come with a grand strategic plan.

“Sadly, we’ve heard all this before, and its previous strategic growth initiatives haven’t exactly gone well. The London-listed Domino’s has been pulling out of overseas territories after failing to make a success outside of the UK and Ireland, and a spat with franchisees remains unresolved.

“The latest plan is to accelerate growth, open more stores and introduce more collection points. There is only so much you can do to refresh Domino’s beyond planting more flags and finding new things to stuff inside its pizza crusts.

“Refining the existing proposition would seem a more logical move, perhaps focusing on initiatives to get customers to spend more money per order, introducing healthier menu options, and being more dynamic on pricing.

“Equally, Domino’s needs to address the threat of growing competition from non-pizza operators. The rise of food ordering apps from Just Eat and Deliveroo mean it is just as easy to order a McDonald’s or a Chinese meal as it is to shop with Domino’s.

“The new executive leadership team will want to look as if they are ambitious, but really this business needs fine-tuning rather than a turbo-charge.”

ITV

“While the pandemic caused massive disruption to ITV and blew a hole in its advertising revenue, causing many investors to switch off from the shares, it was also an opportunity for the free-to-air broadcaster to think about doing things differently.

“ITV had a literal captive audience for its content and might have been expected to see viewing figures soar. In this context the 5% decline in online viewing for 2020 and slump in its audience share is a disappointment and reflects the competition from the BBC and the big streaming platforms and, in the absence of Love Island, a lack of the kind of must-watch shows which draw in viewers.

“In this context ITV will hope last night’s broadcast of the Oprah Winfrey interview with Harry and Meghan will have provided the modern-day equivalent of a water cooler moment.

“The company has made some progress with its own streaming service Britbox, a joint venture with the BBC, but there’s still no indication on the financial contribution it is making to the group.

“Reaching half a million subscriptions in the UK and 2.6 million globally is unlikely to move the needle when you consider Netflix has upwards of 15 million households signed up in the UK alone.

“ITV should benefit from some very soft comparatives year-on-year through the course of 2021 given advertising budgets were virtually frozen for a time in 2020 and the delayed Euros football tournament will provide a boost this summer assuming it goes ahead. Investors will hope the company is in a position to resume dividends sooner rather than later.

“The production business, which provides a less volatile revenue stream than advertising, is also back up and running, though hampered by additional Covid-related costs.”

These articles are for information purposes only and are not a personal recommendation or advice.