Gourmet Burger making it hot in UK kitchen for Famous Brands
DURBAN – Famous Brands’ UK subsidiary, Gourmet Burger Kitchen (GBK), continued to put pressure on the overall performance of the group in the six months to August, despite despite undertaking a turnaround strategy last year.
System-wide UK sales slid by 12.5 percent, however, on a like-for-like basis sales increased by 8.6 percent compared to a decline of 9.7 percent reported last year.
Famous Brands – Africa’s largest branded food services franchisor with brands such as Steers, Debonairs Pizza, Wimpy and Mugg & Bean – has found conditions in the UK very challenging in the past two years, with impairment charges on GBK jumping to R899 million in the year to end February compared to R373m reported a year ago.
The results reported by GBK were in line with management's expectations.
“The business continued to benefit from the extensive range of operational improvements, together with the company voluntary arrangement (CVA) restructuring programme completed in the past year,” the group said.
The system-wide UK sales also reflected the closure of stores as part of the CVA process, the group said.
The group said difficult trading conditions persisted across its primary markets in South Africa and the UK, with subdued consumer sentiment and spend, intense competitor activity and margin pressure.
However, its South Africa's leading brands grew system-wide sales by 6 percent while like-for-like sales increased by 4 percent.
The signature brands, which include Turn 'n Tender, increased its system-wide sales by 14 percent during the period, largely reflecting the opening of a number of new stores in the network while like-for-like sales increased by 1.4 percent.
Famous Brands also operates in the rest of Africa and Middle East (AME) regions. The group said system-wide sales in this region improved by 10.3 percent. Revenue reported during the period was also in line with management's expectations.
Famous Brands said growth was recorded across the brands division in South Africa and AME. However, the supply chain division fared less well.
Its manufacturing business reported a marginal decline in sales and the logistics business delivered revenue growth, but profits in logistics business were negatively impacted by both internal and external factors.
Famous Brands share price closed 0.14 percent lower at R77.80 on the JSE on Wednesday.