MARKET REPORT: Domino’s Pizza soars as it settles franchise dispute

Investors were eager for a slice of Domino’s Pizza after it finally settled a long-running dispute with its franchisees.

The delivery chain’s shares soared 22.1 per cent, or 76.6p, to 422.6p after the firm struck a deal after over two years of wrangling and arguments over profit sharing.

Under the new agreement, Domino’s will invest £20million into the business over three years and boost marketing spending to help attract customers. It will also offer rebates on food costs for franchisees and an improved incentive scheme for new stores.

Delivering: Domino’s Pizza shares soared 22.1%, or 76.6p, to 422.6p after the firm struck a deal after over two years of wrangling and arguments over profit sharing

Meanwhile, franchise owners have agreed to speed up the pace of openings, with at least 45 outlets to be opened each year over the next three years.

As a result of the deal, Domino’s revised up its forecasts, predicting that it will ‘at least’ hit the upper end of its medium-term target of £1.6billion to £1.9billion in sales.

The firm also expects to exceed its goal of opening 200 outlets. The deal was backed by franchisees representing over 99 per cent of Domino’s UK stores. 

Stock Watch – Bloomsbury 

Harry Potter publisher Bloomsbury expanded its library after snapping up an American academic and schoolbook seller for £17.3million.

California-based ABC-CLIO publishes content digitally and in print for schools as well as academic and public libraries.

The acquisition is expected to ‘significantly’ accelerate Bloomsbury’s academic publishing arm in North America as well as strengthen its pool of digital content.

The group’s shares climbed 3.6 per cent, or 12p, to 344p

‘This is an important moment for Domino’s, and I’m delighted we have reached what is truly a great resolution with our franchisees,’ said boss Dominic Paul.

Analysts at broker Liberum said they were ‘surprised that franchisees have given up the fight’ without getting Domino’s to commit to permanently lowering food prices. 

However, they added that ‘the high level of general inflation may have forced the franchisees’ hand’ and pushed them to agree to a deal that allows sales growth to offset rising costs.

The FTSE 100 was up 1.3 per cent, or 89.86 points, at 7260.61 while the FTSE 250 jumped 1 per cent, or 214.08 points, to 22647.96. 

A surprise decision by the Bank of England to raise interest rates, as well as the prospect of three interest rate hikes from the US Federal Reserve next year, put a spring in the markets’ step and raised hopes that a Santa Rally could finally be on the cards.

The blue-chip index was supported by oil stocks. Shell rose 2.1 per cent, or 33.4p, to 1627.2p and BP climbed 2.4 per cent, or 8.05p, to 338.95p as crude prices inched upwards.

British Airways-owner IAG was also up (1 per cent, or 1.22p, at 127.02p) despite terminating its deal to buy Spanish airline Air Europa, which will cost it around £64million.

The Gym Group jogged up 8 per cent, or 18p, to 243p as it flagged a ‘strong recovery’ in membership levels following the end of lockdown. 

Membership of the 24/7 gym operator rose to 753,000 at the end of October from 547,000 in February. Take-up of the company’s premium ‘Live It’ membership rose to 27.1 per cent of members from 24.7 per cent in June.

Clean fuel and energy storage firm ITM Power surged 2.8 per cent, or 10.4p, to 385.4p as it flagged a record backlog of orders at the start of December. 

The group also posted results for the six months to October 31, which saw revenues jump to £4.1million from £0.2million in 2020 while gross losses narrowed to £2.4million from £2.8million.

Oiler Petrofac saw its outlook improving as it looked to draw a line under a Serious Fraud Office investigation into bribery claims. It forecast revenues for the year of around £2.3billion, down from £3billion in 2020, and profits in line with market expectations of around £33.8million. 

However, the group flagged a ‘healthy pipeline of opportunities for 2022. The shares were up 3.9 per cent, or 4.2p, at 112.8p.

Music fund Hipgnosis swung to a half-year loss as the closure of music venues hit demand for its songs. 

For the six months to September 30, pre-tax losses were £13.5million compared to an £11.4million profit in the same period last year.

However, revenues rose to £55.6million from £42.6million. The shares edged up 0.6 per cent, or 0.8p, to 127p.

This post first appeared on Dailymail.co.uk