Domino’s 1H24 result revealed mixed information. Same store sales growth momentum has improved early in 2H24e and is an encouraging sign. However, the underlying cost growth for the business looks elevated and franchisee profitability is well below levels that will reignite store openings. While earnings may have troughed, we expect an acceleration in store growth is two years away given such low franchisee profitability.

Treasury hosted a meeting with Penfolds MD, Tom King. The discussion clarified Penfolds emphasis on luxury wines and efforts to lift its distribution reach across key markets. The next 12 months will be about the globalisation of the brand with French and Californian product released. The company is holding firm to its target of 40%-45% EBITS margins. We see 40% as more plausible as marketing investment is required to build the brand in key markets.