Domino's defends 'revolution' claim
Domino's Pizza's Australian boss Don Meij has been forced to defend the hype leading up to Monday's announcement that promised to "revolutionise" the country's pizza industry, arguing that its new range of premium toppings, priced at $8, was indeed a "revolution".
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.