Investing.com-- Shares of Domino’s Pizza (NYSE:DPZ) Enterprises (ASX:DMP) surged on Friday after the company announced it would close 205 underperforming stores, primarily in Japan, as part of a broader strategy to improve profitability.
The Australian-listed operator of the global pizza chain said the closures—172 of which are in Japan—aim to sharpen its market focus and enhance operational efficiencies.
The move is expected to generate annualized savings of $15.5 million but will come with a one-off restructuring cost of $97 million, the company said. CEO Mark van Dyck, who took over three months ago, emphasized that the company is acting decisively to reshape its business and drive sustainable long-term growth.
"Some of our COVID-period expansion resulted in stores that simply weren’t optimal based on our current customer proposition and removing them will strengthen our network," Dyck said in a statement.
Shares of the company surged 22.2% to A$36.18, their highest level since late October 2024.
The announcement comes as Domino’s faces challenges in several key regions. Japan, once a high-growth market for the brand, has struggled with declining post-pandemic demand and higher input costs.
The company said the store closures would help streamline operations in areas where it lacks scale advantages, with an expected EBIT uplift of A$10-12 million annually.
Despite the restructuring, the company reaffirmed its first-half underlying net profit before tax forecast of A$84-A$86 million.
However, same-store sales (SSS) fell 0.6% globally, with Japan and Europe underperforming, while Australia and New Zealand delivered slight growth.
Domino’s Australia also announced a 55.5 AU cents per share interim dividend, maintaining its payout from the previous year.