Domino's Pizza to exit overseas operations, and Unilever's ice cream sales melt away

“DUP’s rejection of Boris Johnson’s Brexit plan ‘as it stands’ served to trigger a new sell-off in the pound and in turn dragged down the UK-focused FTSE 250 index,” says Russ Mould, Investment Director at AJ Bell.

“The market is being particularly sensitive about all things Brexit-related as the deadline draws ever nearer.

“While the FTSE 250 was down on Thursday, the index could well change direction on the slightest bit of news on Johnson’s negotiations. For now, investors simply don’t know how to play Brexit with their portfolios."

Domino's Pizza

“The people running the London-listed part of the Domino’s Pizza empire have had eyes bigger than their stomachs. A ferocious hunger for growth saw the business snap up the rights to numerous overseas territories which have unfortunately resulted in indigestion.

“Domino’s is now pulling the plug on its international operations after admitting defeat. This is the sensible thing to do. Management should be applauded for making the decision to pull out rather than digging themselves a bigger hole.

“The international interests were originally expected to break even this year but Domino’s said in August that losses were increasing in several territories and trading visibility was weak. Washing its hands of these problems should provide a tighter focus on the UK and Ireland interests.

“There is now a real opportunity to fix Domino’s which has lost its way in recent years thanks to over-expansion, deteriorating relationships with franchisees, international woes and heightened competition.

“For years this was a great business, generating lots of cash and finding a way to sell more pizzas each year. It is now looking for a new chief executive and a new chairman, meaning we could get some fresh thinking on strategy very soon.

“It wouldn’t be surprising to see a ‘back to basics’ approach and a focus on getting things right with the existing estate rather than finding new avenues for growth.”

Unilever

“Your grandmother might have told you to drink hot tea to cool down on a hot day and maybe this explains why consumer goods giant Unilever has seen sales of brands like PG Tips and Lipton slide as summer 2019 fails to live up to the 2018 heatwave.

“The comparatively cooler and wetter summer undoubtedly meant more Ben & Jerry’s ice cream stayed in the freezer.

“This helps explain why third quarter performance was a smidge short of expectations with 2.9% growth and very slightly behind the performance of rival Nestle which also reported today.

“A weak showing for the shares heading into today’s announcement suggests investors were fearing worse.

“Nonetheless, the continuing pressure on sales in developed markets, which fell 0.1%, does reflect the structural challenge facing big brands as more of us look to buy local products which are perceived to have more integrity.

“This leaves the company more and more exposed to emerging markets where growth remains strong.

“Interestingly Unilever has changed the way it measures underlying sales growth to contend with emerging markets, like Argentina, which are in a hyper-inflationary state.

“Some observers suggest this will flatter the figures and it could reflect the company’s focus on at least getting close to its targeted growth rate of between 3% and 5%.”

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