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Famous Brands share’s rise despite bleak sales figures

Famous Brands share price leapt by more than 4 percent on the JSE yesterday morning, despite reporting a huge fall in sales in South Africa due to the trading restrictions in response to the Covid-19 outbreak. Picture: Karen Sandison/African News Agency(ANA)

Famous Brands share price leapt by more than 4 percent on the JSE yesterday morning, despite reporting a huge fall in sales in South Africa due to the trading restrictions in response to the Covid-19 outbreak. Picture: Karen Sandison/African News Agency(ANA)

Published Mar 12, 2021

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DURBAN - FAMOUS Brands share price leapt by more than 4 percent on the JSE yesterday morning, despite reporting a huge fall in sales in South Africa due to the trading restrictions in response to the Covid-19 outbreak.

Its leading brands consist of Steers, Mugg & Bean, Wimpy and Debonairs Pizza, while signature brands include Tasha’s, Mythos and Lupa Osteria.

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The group said in a trading update yesterday that its South African signature brands system-wide sales declined by 66 percent in the 12 months to end February while its South African leading brands' system-wide sales fell by 28.6 percent.

Across its trading markets, which is South Africa, the rest of Africa, the Middle East (AME) and the UK, the negative financial impact of the Covid-19 global pandemic and resultant national lockdowns and trading restrictions were severe.

“During the lockdowns, in line with regulations, our South Africa and UK operations were shut in April 2020, apart from the South Africa retail division. Prescribed restrictions in the AME region were slightly less onerous, affording some trading activity,” the group said.

The AME region reported a 22.9 percent decline in system-wide sales after experiencing less stringent trading restrictions.

The group said it resumed trading after the gradual easing of restrictions in South Africa and the UK in the first and second half of the reporting period enabled improved performance of the business while complying with regulations.

However, its supply chain division, which consists of manufacturing and logistics divisions, was hard hit by the trading restrictions.

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The manufacturing revenue was down by 24 percent and logistics revenue declined by 27 percent.

Its retail division, which supplies third-party retailers and wholesalers in South Africa with branded licensed products, was permitted to trade throughout the lockdown.

Retail sales during the period amounted to R151 million.

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In Gourmet Burger Kitchen (GBK) restaurants in the UK and Ireland, the business was impaired in full at R1.3 billion, net of tax, after the business was placed into administration in October last yea,r in accordance with the insolvency legislation in the UK.

Famous Brands said it is waiting for the finalisation of the administration process which is handled by the administrator.

“However, there will be no further operating losses impacting the group’s results from the date on which GBK entered into administration as the group no longer has control over GBK,” the group said.

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Famous Brands acquired GBK for £120m (R2.51bn) in 2016 in a move it explained as furthering its geographical reach. However, the move has hurt the group which has led to huge impairments in the last few years.

Famous Brands expects to release its full-year results on May 25.

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