Domino's Pizza Group UK slides 16% on weak earnings and labour costs 📉

3:55 pm 5 August 2025

On Tuesday, shares of Domino’s Pizza Group (DOM.UK) suffered the steepest single-day decline in the company’s history, plunging 16% (more than 20% as the market opened). The market’s reaction was anything but accidental  investors were caught off guard by a downgraded full-year earnings outlook and a troubling cost picture painted by the company’s leadership.

What triggered such a sharp sell-off?

Investor confidence was shaken for good reason. Below are the key factors that drove the market’s dramatic response:

  • The company revised its EBITDA guidance downward from a previously expected range of £141–150 million to a new estimate of £130–140 million. This revised range falls below the market consensus, which stood at an average of £146.1 million.

  • As of April, higher employer National Insurance contributions took effect in the UK. CEO Andrew Rennie openly admitted that the additional costs amount to “millions,” significantly eroding the company’s profitability.

  • In the first half of the year, the number of new pizza outlets fell short of expectations. The company now anticipates store openings in the “mid-20s” — a steep drop from the previously forecasted figure of more than 50. Franchisees are reportedly taking a more cautious approach in light of rising labor costs.

  • In the first half of 2025, pretax profit fell 32% year-over-year to £40.5 million, despite a modest 1.4% increase in revenue. Amid rising food prices and a general decline in purchasing power, UK consumers have become more frugal, cutting back on discretionary spending like takeout and food delivery.

While management tried to soften the message by pointing to growing market share and improved like-for-like sales toward the end of July, investors focused on less reassuring indicators:

  • No sustained rebound in sales during May and June

  • Further cost pressures expected following the UK government's autumn fiscal update

  • Slowing investment momentum and franchisee hesitation

The company also revealed it is actively exploring the acquisition of a second brand to operate alongside Domino’s. While the board emphasized that no equity issuance would be required, the lack of concrete details means the market remains fixated on the risks rather than the potential opportunities.

CEO Andrew Rennie noted that despite the challenging environment, Domino’s continues to grow its market share by offering “great value, innovative products, and even faster delivery.” However, even these strengths were not enough to counterbalance the mounting cost pressures and waning consumer demand.

For investors, the coming months will be critical. Much will depend on how the market reacts to management’s next steps — whether in the form of further price adjustments or any strategic acquisitions. For now, though, the scale of the share price drop leaves little doubt: investor confidence has taken a serious hit.

 

Source: xStation5

The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.

Share:
Back

Join over 1 600 000 XTB Group Clients from around the world.