Temple & Webster reported sales growth for the first 20 weeks of 18%. The update implied a slowdown from the August trading update from 28% to 14% in the interim to the AGM. Growth of 18% was below Visible Alpha consensus expectation for 1H26e at 23% and the share price response reflected the concerns around retaining sales growth at more than 20%. Temple continues to win share and will eventually reach scale to achieve a higher EBITDA margin, where we forecast 12% for FY40e.

We expect a more mild slowdown in Domino’s same store sales growth (SSSg) in key markets as higher COVID-19 cases are likely to lead to more sales of pizza. Our analysis of data from restaurant bookings in Japan has shown a drop recently, which is likely to lead to more home delivered food. Europe is also likely to have decent SSSg in 1H22e. In the report, we address  Domino’s Japan’s potential same store sales path; Domino’s Europe’s exposure to rising COVID-19 cases; and The upside and downside risks from here.

Domino’s faces a risk of slowing sales. We expect same store sales growth (SSSg) to slow meaningfully over the next 12 months. While Domino’s has had strong sales and store openings, some of its sales gains are a result of COVID-19 lockdowns in our view. In Japan we expect SSSg to turn negative in 2022, this is the region that had the largest growth over 2020 and 1H of calendar 2021. As economies reopen, consumers will have other food choices.