A global pizza company's strategy to ditch discounts has helped it swing to a profit, but slipping revenues drove investors to slice their holdings.
Domino's Pizza posted a $40.9 million net profit after tax in the six months to December, up from a $22.2 million loss a year earlier, while revenue from ordinary activities fell 5.5 per cent to 1.1 billion.
The loss a year earlier was due to $115.6 million in restructuring costs, with more than $80 million linked to the closure of 205 loss-making stores, many in the tough Japanese market.
Underlying profit after tax rose 2.2 per cent year-on-year to $60.1 million.
Chief executive Russell Weiner was optimistic about the group's performance and its place in the quick-service restaurant segment.
"There seems to be a narrative out there that pizza is a challenged and declining category," he told an earnings briefing on Wednesday.
"That is just not true."
The pizza segment has grown its market share between one and two per cent since 2019, and Domino's had dominated the sub-category for more than a decade.
"So to be clear, our growth prospects have never been greater because our brand has never been stronger," Mr Meiner said.
"Our 'Hungry For More' strategy is working, and we're leveraging the scale and advantages of being the number one pizza company in the world."
Investors were less enthusiastic, as they unloaded Domino's shares, sending the stock more than 14 per cent lower to $18.55 by in afternoon trading.
Executive chairman Jack Cowin said the results reflected decisions taken to increase franchise profitability, such as cutting discounts, which reduced sales but improved margins.
"Our focus is straightforward; strengthen unit economics, execute consistently and return the business to sustainable growth," he said.
"We remain committed to delivering improved franchise partner and shareholder returns."
Despite the share price sell-off, it was a positive result, according to eToro market analyst Josh Gilbert.
"Domino's has delivered a result where fewer pizzas were sold, yet the business is in better shape than it was a year ago," he said.
"Domino's business model only works if franchisees are making money, because profitable franchisees open more stores, invest in their operations, and deliver a better customer experience."
That fact the company deliberately sacrificed earnings in Australia to redirect savings back to franchise partners showed exactly where management's priorities were, Mr Gilbert said.
Earnings guidance for the 2026 financial year remained in line with expectations and the board declared an unfranked interim dividend of 25 cents per share, down from 55 cents a year earlier, further ruffling shareholders' feathers.
