Forum Topics DMP CEO moves
Solvetheriddle
Added 2 months ago

Must be the week for founders, long-serving CEO's to go.

Anyone who listened to the last DPZ results call would be in no doubt that there was significant pressure on DMP to do something about the underperforming operations.

as i wrote back in September

For a company to carry 38% of stores (in aggregate) underperforming is unsustainable for a growth business. The problems appear quite different with huge and unsustainable store expansion in Japan and inconsistency and lack of execution in France. 

also the new CEO commences tomorrow so this has been in train for quite a while.

for a company to get caught out in Japan, as they were, i think is difficult to understand, extrapolating a trend that was due to C19 was, with all due respect, schoolboy error type stuff. so be it. the chickens are home to roost

the new CEo has a very good pedigree and maybe a new set of eyes is required and some hard decisions to be made. i cant see an easy fix, but im not an experienced QSR executive. the Compass Group is well regarded and some investors i respect have holdings in it.

for Dom its a cruel end to a long successful career, all glory is fleeting.

i hold a tracker position in this one and will be watching what they get up to. The culture is success and growth, not what we have seen in the past two years.


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mikebrisy
Added 2 months ago

@Solvetheriddle for many years $DMP was on my watchlist. I never got comfortable with it on valuation terms,and each time watched the SP run further away from anything I could reasonably justify. I gave up following it when various talking heads were amping it as a "tech company".

From my perspective, the fundamentals of growth would always come home to roost. Today, we are back at P/E ratios akin to 2018/19 when I followed it closely. But with a forward P/E of 24, a more mature business like this has to drive good, sustainable EPS growth to justify the valuation. There is a lot of margin improvement locked into the consensus. But if you believe that $DMP can turn around underperforming regions, drive penetration in new regions, and get on top of margins, and if you have conviction about that, then we are back in a zone where the SP looks interesting again.

I don't have a view one way or the other, as fast food retail is not an area I have invested much effort in understanding in the last 4-5 years.

More often than not, "growth companies" come unstuck as some stage, and that is especially true when they become market hype stories, fundie favourites, and crowded trades. As a growth invester, it is important to identify the signs and "get off the bus" in time. You don't want to be late in seeing the thesis break. That said, I recognise that for a time, $DMP offered investors the chance to make a lot of money.

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Mujo
Added 2 months ago

Never made sense to me at the multiples it traded at given most people dislike the product.

I also think the management was thought of more positively by the market than they deserved.

To think managers like Hyperion made so much money out of this stock and have been so wrong.

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