Traders have taken a slice out of Domino's Pizza's share price after restructuring costs from store closures hit profits.
Shares in the Australian-based offshoot of the American fast food chain plunged more than 11 per cent on Tuesday morning as investors chewed a $22 million loss for the six months ended December 29.
The loss was a result of Domino's incurring $115.6m in restructuring costs, of which $80.6m was related to the recently-announced closure of 205 loss-making stores, the majority of which were in the struggling Japanese market.
Domino's chief executive Mark van Dyck said the "decisive" closures were among the first outcomes of a comprehensive business review intended to simplify the company and improve profitability.
"Cost control plus sales growth is a powerful equation in our business. Our model delivers great leverage for stores as they build sales but we know there is more work to be done," he said.
Excluding non-recurring items, which also included legal costs and the rollout of a new finance and supply system, Domino's recorded a 5.7 per cent drop in net profit after tax compared to the same period the year prior.
Network sales fell 2.9 per cent to $2.08 billion, including a negative impact from foreign exchange fluctuations and store closures.
On a positive note, franchisee profitability rose 13.7 per cent and same store sales grew 1.3 per cent.
Mr van Dyck said Domino's operates in "a resilient global pizza market with significant growth potential".
“These results demonstrate early progress. However we have more to do to restore value for our shareholders, franchise partners, and customers," he said.
"As we do so, we will be prioritising profitable same store sales growth similar to other retailers, with selective store additions."
Domino's provided no earnings guidance for the rest of the financial year.
E&P retail analyst Phillip Kimber expected consensus profit estimates for the current financial year to decline by around five per cent. He predicted a five to 10 per cent downgrade for financial year 2025.
"We expect the share price will continue to come under pressure until the market gets more comfortable in where FY26/FY27 earnings will re-base to," he said.
Asian same-store sales fell 4.2 per cent but Japan stores are expected to benefit from strategic closures starting in the third quarter, Domino's said.
Same store sales grew 0.6 per cent in Australia and New Zealand and Europe, where the highly successful Doner kebab campaign in Germany was offset by continued weakness in France.
Domino's dividend was unchanged from the prior corresponding period at 55.5 cents per share, unfranked.
