Domino's defends 'revolution' claim
The chief executive also denied that he had misled the sharemarket and the media when, during an earnings' briefing on February 13, he foreshadowed the new toppings' launch by saying he had a product that would "revolutionise the Australian pizza industry".
Since that presentation and roadshow in February, its shares have risen from $9.95 to a record high last Friday of $11.55 - a gain of 16 per cent. It was also promised at the time that Monday's announcement would be the biggest for Domino's in 20 years.
Its shares fell by 3.3 per cent in early trade as consumers who were prepared for "a revolution" - ramped up by an intensive social media campaign - were instead greeted by new premium toppings and square-shaped pizza bases, for $8.
"I definitely don't think we have misled the market," Mr Meij said. "This is a significant change ... when you can sell an $8 premium pizza with Peking duck, and blue cheese, pork belly ... you tell me in Melbourne right now where you can get an $8 pizza with that on it."
Domino's ended trading 15¢ weaker at $11.40.
Moelis & Co analyst Todd Guyot said he was unconcerned about the reported hype surrounding Monday's announcement.
"Domino's have shown an ability over an extended period of time in driving like-for-like sales through promotional activity," he said.
"The share price trades on a high P/E [price-earnings ratio] so it doesn't take much, a change in sentiment in the short term, to knock the share price around and the stock isn't particularly liquid.
"I think it's irrelevant in the bigger scheme of things," he said.
Frequently Asked Questions about this Article…
Domino's Australian CEO Don Meij said the company would "revolutionise the Australian pizza industry" ahead of a Monday announcement. The company launched a new range of premium toppings and square-shaped pizza bases, marketing an $8 premium pizza option featuring toppings such as Peking duck, blue cheese and pork belly. The build-up included an intensive social media campaign and a promise the announcement would be the biggest for Domino's in 20 years.
After Don Meij foreshadowed the new product on February 13, Domino's shares rose from $9.95 to a record high of $11.55 (a 16% gain). On the day of the announcement shares fell about 3.3% in early trade and the stock finished 15 cents weaker at $11.40.
No. Don Meij denied that he had misled the sharemarket or the media. He defended the claim by calling the new premium toppings and $8 pizza a "significant change" for the market and pointed to the unique topping mix as evidence of that change.
The announcement introduced a new range of premium toppings and a square-shaped pizza base. Domino's marketed an $8 premium pizza option that can include toppings like Peking duck, blue cheese and pork belly.
Moelis & Co analyst Todd Guyot said he was not concerned about the reported hype. He noted Domino's track record of driving like‑for‑like sales through promotional activity, but also warned the stock trades on a high price‑earnings (P/E) ratio and is not particularly liquid, so short‑term sentiment changes can move the share price.
As noted by an analyst in the article, a high P/E ratio means the market has elevated expectations for earnings, so the share price can be sensitive to news and sentiment. Low liquidity means fewer shares trade frequently, which can amplify price moves. For everyday investors this can translate into greater short‑term volatility after announcements or marketing hype.
The article reports an analyst view that the short‑term market reaction to the announcement is likely irrelevant in the "bigger scheme of things." Todd Guyot emphasised Domino's historical ability to drive sales with promotions, implying the launch alone is not seen as a definitive long‑term shift by that analyst.
The article highlights a few takeaways: marketing hype can move expectations and push share prices higher before an announcement; management statements can influence investor sentiment; and stocks with high P/E ratios and low liquidity can be more volatile. Everyday investors should separate short‑term noise from fundamentals, consider valuation and liquidity, and read management claims in context before making investment decisions.
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