Johannesburg - British retailers New Look and Iceland Foods and the Virgin Active gym-club chain are prepared for either outcome when the country votes on whether to remain in the European Union next week, according to the head of their South African owner.
“Our businesses are strong enough to go with whichever scenario,” Brait South Africa CEO John Gnodde said Tuesday. Strong cash-flow generation has enabled the companies to be prepared, he said.
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Brait, whose biggest shareholder is South African billionaire Christo Wiese, increased its exposure to the UK last year, acquiring majority stakes in Virgin Active and clothing retailer New Look and increasing its holding in discount grocer Iceland. Four polls on Monday put the “Leave” campaign ahead in the EU referendum vote, causing the pound to plunge. The Sun, Britain’s biggest-selling newspaper, backed a so-called Brexit.
Brait, based in San Gwann, Malta, invested about R32.2 billion ($2.1 billion) last year mainly on its three British investments, it said in an earnings statement.
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Virgin Active’s revenue gained 4 percent on a constant-currency basis in 2015, while earnings before interest, taxes, depreciation and amortisation rose 15 percent. The fitness chain agreed to sell 35 clubs in the UK, focusing the business on London, the southeast and major cities, it said. New Look’s sales and earnings also gained.
“Both investments are on track, showing excellent growth and cash generation,” Gnodde said. “Our focus is on bedding down the investments.”
Brait shares declined 2.3 percent to R152.80 at 12:07 p.m. in Johannesburg, valuing the company at R79 billion.
BLOOMBERG