Domino’s: is it time to reorder fallen pizza maker?

afr.com:

Let’s face it – investing in retail now is as contrarian as it gets. Domino’s Pizza Enterprises, the master franchisee for Domino’s in Australia and New Zealand, has been out of favour with investors for some time.

The fast-food giant has tumbled by more than a third from its 52-week high of nearly $77 due to sluggish same-store sales growth, rising food costs and higher rents. Just two years ago, Domino’s was sitting at an all-time high of $165 per share.

The one-time market darling was over-earning amid the pandemic when consumers were hibernating at home. Since then, input costs, particularly of cheese, have risen.

Domino’s Pizza CEO Don Meij says that the chain must get its price points and product launches right to do well amid a crowded market. 

Long-serving chief executive Don Meij has suffered too, given his large holding has been sliced in value. But he is still hoping to make a massive profit on the sale of his Italian villa-styled Los Angeles mansion which is up for sale at just under $US30 million ($45 million). Mr Meij and his wife bought the Bel-Air property – which has indoor and outdoor pools, a wine cellar and a movie theatre – for about $US21 million two years ago, according to multiple media reports.

Domino’s Pizza certainly has the market split with six “buys”, seven “holds” and four “sells”.

Goldman Sachs in late July downgraded to a “sell” from “neutral” with a target price of $41.10, while UBS also has a “sell” on the pizza chain with a $40 target price.

UBS head of consumer research Shaun Cousins said while the removal of a delivery fee, which caused major blowback from consumers in Australia, has been positive, the outlook for delivery sales remains a problem.

Mr Cousins believes that while most