Shares in Domino's Pizza Enterprises Limited (ASX: DMP) climbed 9.6% on 30 July 2026 after the company reaffirmed FY26 earnings guidance (through ASX update dated 29 July)and highlighted significant improvements in cash generation, cost control and franchise profitability.

The company said preliminary unaudited underlying net profit after tax (NPAT) is expected to remain within its previously guided range of $118 million to $122 million, while free cash flow is forecast at approximately $164 million, representing an improvement of around $116.6 million compared with FY25.

The strong cash performance came alongside a major balance sheet review, with Domino’s recognising approximately $259 million in asset write-downs, largely reflecting a reassessment of international operations, technology investments and store assets.

FY26 transformation program delivers cost savings and stronger cash generation

Domino’s entered FY26 with a focus on improving profitability, strengthening franchisee returns and rebuilding cash flow.

The company confirmed it has delivered its targeted cost reduction program, achieving $60 million to $70 million in annualised savings through:

  • workforce optimisation;
  • reduced technology costs;
  • supplier cost efficiencies.

The company also completed a refinancing program, securing $1.05 billion in new syndicated banking facilities with improved pricing, staggered maturities and greater financial flexibility.

Following these initiatives, net leverage has reduced to approximately 1.9 times EBITDA, consistent with the company’s previously stated target.

Management said the company now enters FY27 with improved liquidity, stronger cash generation and increased balance sheet flexibility.

Franchise profitability improves despite weaker sales environment

While Domino’s reported negative same-store sales growth during FY26, management said the company deliberately shifted away from low-margin sales growth and prioritised sustainable franchise economics.

Group same-store sales declined 4.1% during FY26, with regional performance including:

  • Australia and New Zealand: down 4.7%;
  • Europe: down 2.2%;
  • Asia: down 6.7%.

However, franchise profitability improved, with rolling 12-month franchisee EBITDA reaching $105.7 million, an increase of 11.3% year-on-year on a constant currency basis.

Domino’s said the improvement reflected greater pricing discipline, improved product mix and tighter operational execution.

Western Australia model provides blueprint for broader recovery

A key highlight from the update was the performance of Domino’s Western Australia operating model.

The company said participating franchise partners achieved record store EBITDA for five consecutive months, with average store EBITDA increasing by more than 30% over the five months ending May 2026 compared with the previous corresponding period.

The improved performance was achieved despite lower sales volumes, highlighting the impact of:

  • better promotional discipline;
  • improved order economics;
  • operational efficiencies.

Domino’s plans to expand the WA model across the broader Australian network during FY27.

Balance sheet review results in $259 million impairment charge

As part of its year-end financial review, Domino’s reassessed the carrying value of several assets and expects to record approximately $259 million in pre-tax write-downs.

Around $246 million of the impairment charge is expected to be non-cash.

The major components include:

International operations

The company expects to write down:

  • $70.5 million relating to France goodwill and intangible assets;
  • $45.7 million relating to Taiwan goodwill and intangible assets.

Domino’s said the impairments reflect weaker-than-originally expected performance assumptions, although both businesses are expected to remain operationally viable.

Technology assets

A further $43.8 million write-down relates to technology development costs following a review of the company’s IT strategy.

Domino’s said the reassessment will reduce future amortisation expenses, although some technology costs will move into operating expenses.

Store network optimisation

The company expects approximately $69 million in store-related asset write-downs, reflecting:

  • closure of underperforming locations;
  • accelerated refranchising;
  • revised store asset valuations.

Up to 60 stores are expected to permanently close across Europe, ANZ and Asia.

Domino’s expects these actions to deliver approximately $10.9 million in annualised EBIT improvement.

FY27 focus shifts towards sustainable growth

Domino’s said the FY26 reset has created a stronger foundation for future growth, with management now focused on improving sales momentum and expanding profitability initiatives.

Incoming Group CEO and Managing Director Andrew Gregory will commence on 5 August 2026, with priorities including:

  • rebuilding sales growth;
  • improving franchise returns;
  • strengthening long-term shareholder value.

The company also appointed Uschi Schreiber as Deputy Chair.

Investor outlook: cleaner balance sheet but execution remains critical

Domino’s FY26 update represents a significant operational reset.

The company has improved cash generation, reduced leverage and strengthened franchise economics, while using impairments to realign asset values with current market conditions.

The key challenge for FY27 will be converting improved profitability foundations into renewed sales growth.

Investors will be watching whether the Western Australia operating model can be successfully scaled nationally, whether international markets stabilise, and whether the company can return to sustainable network expansion.

With stronger free cash flow and a healthier balance sheet, Domino’s enters FY27 with improved financial flexibility — but execution against its strategic priorities will determine the next phase of shareholder returns.