Australian stockbroking firm Petra Capital, which has a research distribution and trading joint venture with CGS International, is staying “buy” on ASX-listed Domino’s Pizza Enterprises with a higher target price of A$25, up from A$24.50, citing “encouraging progress” and “steps in the right direction”.
Domino’s Pizza Enterprises, not to be confused with Nasdaq-listed brand owner Domino's Pizza Inc, posted A$3.7 million in net loss after tax for FY2025.
During the financial year, the group closed 312 underperforming stores, including 233 in Japan, “where we recognised we expanded too fast”, says executive chair Jack Cowin in the group’s FY2025 annual report, released in August.
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“We are paying down debt and have no need to raise capital. But we do need to run leaner. That will allow us to reinvest more in what matters,” Cowin adds.
At Domino’s Pizza Enterprises’ Nov 12 annual general meeting, the group revealed “positive progress in its business reset”, with A$60 million to A$70 million annualised cost savings identified, according to Petra Capital analyst Sam Haddad.
More than A$50 million has been “actioned to date”, adds Haddad, with A$20 million to A$30 million benefit in FY2026. Some two-thirds of FY2026 savings will flow directly to franchisees through lower food costs and greater marketing reach, according to the group.
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The balance will improve efficiency at the corporate level, offsetting short-term warehouse headwinds from reduced volumes, writes Haddad in a Nov 13 note.
The cost-cutting measures have led to a 10% reduction in advertising in Australia and New Zealand. In Japan, fewer discount and voucher offers have led to a 20% cut in advertising costs. “This is negatively impacting orders [and] sales from low price-seekers in the short term but resulting in higher profits,” says Haddad.
Group same-store sales (SSS) was negative 1.2% in the first 17 weeks of FY2026, compared to a shallower negative 0.9% in the first seven weeks. However, Haddad, thinks this is a “good outcome”, “considering the change in strategy”.
Interestingly, Malaysia SSS saw double-digit growth over the same period. The group’s Germany and Malaysia operations “are now tilting more to store growth prospects”, says Haddad.
According to the FY2025 annual report, “early results indicate that franchise stores are outperforming corporate locations [in Malaysia], highlighting the potential of the model in this market”.
Domino’s Pizza Enterprises is confident that its FY2026 net profit after tax will exceed consensus forecasts of A$118.9 million. This implies a modest increase compared to FY2025 underlying net profit after tax of A$116.9 million.
Petra Capital is “already ahead of consensus”, notes Haddad, with a forecast FY2026 net profit after tax of A$126.4 million. That said, Haddad is “2H2026 weighted”, looking more favourably at the January to June 2026 period.
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Shares in Domino’s Pizza Enterprises closed A$1.21 lower, or 5.3% down, at A$21.67 on Nov 18. Although its shares are down some 26% year to date, the stock has staged a recovery from the start of October, gaining 44% over the past month.
Table: Domino’s Pizza Enterprises
